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The new pension scheme is sponsored by the employer is a hybrid of a traditional 401k and a Roth IRA.
Tax rates were reduced to income, destroyed the marriage penalty and the "death tax" is no longer one way. This is a result of economic growth in the Bush administration's tax cuts and Reconciliation Act, which Congress adopted with a Republican in 2001. Another provision in the Act came into force January 1, 2006 called a hybrid of a traditional 401k and a traditional Roth IRA, a Roth 401k.
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However, another employer sponsored savings plan, the new Roth 401k works much like a traditional 401k plan. Workers invest a portion of their income into a fund along with contributions from your employer (if applicable). The difference is that the traditional 401k with "before tax dollars and Roth 401k plan uses" after-tax dollars will be financed. But the Roth 401k is tax money at retirement as a Roth IRA. Traditional 401k plan moving tribute during his career until retirement.
Although it may sound like the best of both worlds, it is important to note that no employer is obligated to offer new Roth 401k. In fact, a recent study of employee benefits and consulting firm Hewitt Associates, only 31% of employers currently offer traditional 401k plan are considering implementing the new Roth 401k.
Contribution limits for retirement are as follows: in 2005, $ 14,000 to a 401k and $ 4,000 for an IRA, whether traditional or Roth. In 2006 this figure will increase to $ 15,000 for both 401k and IRA.
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