Roth Option

DEFINITION of 'Roth Option'

An option available within some employer-sponsored qualified plans that allows for Roth tax treatment of employee contributions. The Roth option allows employees to deposit money into their retirement plans on an after-tax basis. This feature is available for both 401(k) and 403(b) plans.

BREAKING DOWN 'Roth Option'

The Roth option is a godsend for highly compensated employees whose incomes are too high to permit Roth IRA contributions. Annual contributions can allow them to accumulate an enormous pool of tax-free cash by the time they retire.

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RELATED FAQS
  1. Is the Roth limit the same for my employer's Roth IRA as a normal contribution to ...

    My employer offers a Roth IRA as part of its 401k options. ... Read Answer >>
  2. Am I eligible to contribute $6,500 to a Roth IRA or a regular IRA?

    I have been saving the max $24K in a Roth 401k. I have a salary of $225K and own a small business with about 11 employees, ... Read Answer >>
  3. How is a Roth 401(k) taxed?

    Learn about the tax advantages of using a Roth 401(k), with tax-free earnings and no required minimum distributions, if this ... Read Answer >>
  4. What's the difference between a 401(k) and a Roth IRA?

    Discover that a 401(k) and a Roth IRA differ primarily on tax treatment, investment options, employer involvement, and limitations ... Read Answer >>
  5. What are the main differences between a Roth 401(k) and a Roth IRA?

    Learn the difference between a Roth 401(k) and Roth IRA. Each offers the benefit of many years of tax-free compounding, a ... Read Answer >>
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    Discover how Roth 401(k) accounts are taxed in a similar manner as Roth IRAs and have several potential advantages over traditional ... Read Answer >>
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