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.


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.

  1. Roth IRA

    A Roth IRA is an individual retirement plan that bears many similarities ...
  2. Backdoor Roth IRA

    A backdoor Roth IRA allows taxpayers to place retirement savings ...
  3. 401(k) Plan

    A 401(k) plan is a type of retirement account sponsored by employers ...
  4. Employer-Sponsored Plan

    An Employer-Sponsored Plan is a benefit plan offered to employees ...
  5. Employee Contribution Plan

    An employee contribution plan is an employer-sponsored savings ...
  6. Qualified Distribution

    Distributions made from a Roth IRA that are tax and penalty free. ...
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