Is a Roth 401(k) in your future?
Now that the stock market has gone up and down for the past year, individuals are looking for ways to recapture their investments and save for retirement.
An often overlooked way to makeup lost investments is to look into an employer Roth 401(k). Of course the contributions an employee makes to the Roth 401(k) are on an after-tax basis; that is, you don't receive a reduction of taxable compensation for Federal income tax purposes, but you do have the opportunity to grow income on a tax free basis.
The aggregate deferrals to both a traditional 401(k) and a Roth 401(k) cannot exceed $16,500.00 plus $5,500.00 for 2009.
And if you establish a Roth 401(k), distributions are tax-free and penalty-free, at a later date, if you hold the Roth 401(k) for a period of at least five years. Any distributions must result from at least one of the following: 1) the participant is at least age 59 1/2, 2) the participant is deceased, or 3) the participant is disabled.
Roth 401(k) accounts are subject to the required minimum distributions. So that when you reach age 70 1/2, you must examine the options for receiving the required minimum distribution.
If you would like more information about Pennsylvania Elder Law, Business Law or Tax Law, please contact an experienced Pennsylvania Lawyer who is also a Certified Public Accountant (CPA) via email or phone us at (724) 216.6551 at our Greensburg, Pennsylvania office.
The Iezzi Law Office serves clients primarily in southwestern Pennsylvania, including Greensburg, Pittsburgh, Delmont, Monroeville, Latrobe, Irwin, Uniontown, Connellsville, Indiana, Somerset, including the following counties: Westmoreland, Allegheny, Erie, Fayette, Indiana, and Somerset; additionally, we also advise clients in other states and some foreign countries.
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IRS CIRCULAR 230 DISCLOSURE:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
