Administratively and operationally, does a 401(k) Plan with a Roth feature differ?
Actually, they differ very little. Employers will be required to report Roth deferrals separate from traditional deferrals and they will be tracked separately, but many of the administrative functions remain the same as listed below: -Maximum deferral limits for both Roth and Traditional are the same -Participants can make Roth catch-up contributions -Roth Deferrals can be matched – although match contributions are considered pre-tax and will be taxed appropriately at the time of distribution -Discrimination tests must be performed for plans with a Roth feature (unless they are Safe Harbor Plan) May Plans offer both Roth 401(k) and Traditional 401(k) deferral options? Yes. Plans may offer both, but for administrative purposes, Employers may make participants choose one type of deferral for a plan year. Which deferral option is better, Roth or Traditional? To determine which is better, a number of factors must be considered, namely: 1) Ability to afford higher contributions; 2) current
