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Let me understand....your company's match can go into the ROTH 401k? Wow. OK.
I've only seen it where companies specifically say: the employees contribution can go into the ROTH 401k -- but the company's match has to go into the Traditional 401k...the match much be pre-tax.
No the company puts their matching portion in what I believe is a pre-tax bucket (but it's shown separately in my fideltiy account, labeled as "employer match". But the total considered for matching counts the employee's contributions in either pre-tax, roth, or the combo. As long as the employee has contributed 6% they will get the full amount of the match by the employer.
In fact every type of contribution is in its own bucket and the categories in our plan are:
They separate it all out, I assume for tax purposes and reporting to the IRS, etc. We are allowed to designate what % goes where, even for the bonus payout periods (twice a year). The only thing an employee does not control is saying where the employer's match goes.
Yes. That's what I thought. But I'm still not crazy about having contributions in one account that are treated differently tax-wise. And also, when I ever I do take money out, I'd have to take the same amount from the Trad. balance AND the Roth balance. So again upon withdrawal, monies are treated differently tax wise. Again, I'm the only one apparently -- but I believe that COULD lead to mistakes in calculations.
Suppose the administrator (Vanguard, Fidelity, or whoever.....) doesn't take out evenly from each balance. Suppose they just don't. It's overlooked, Or it's an honest mistake. But it's done. I, ME, I am the one who is screwed and could face a penalty for it not being done correctly. When the 401k is ALL pre-tax -- sure the statement lists each pot separately -- employee contribution, company match, and employee catch-up, etc. BUT all that money is pre-tax and therefore it's all treated the same tax-wise. The extra complication of SOME of it being pre-tax -- and SOME of it being after tax doesn't exist.
That's all. But I seem to be the only one that has that concern. Me friends have accused me of being a drama queen. Perhaps I'm looking for a complication where there isn't one. But the bottom line remains you have two pots of money, treated differently tax wise in one account.
I firmly believe this is incorrect
I've never heard of getting the employer max via your ROTH 401K
To my knowledge, in every case, you need to contribute to your traditional 401k in order to get the employer match.
And also, when I ever I do take money out, I'd have to take the same amount from the Trad. balance AND the Roth balance.
What rule is that? Never heard of such a requirement.
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But I seem to be the only one that has that concern. Me friends have accused me of being a drama queen. Perhaps I'm looking for a complication where there isn't one. But the bottom line remains you have two pots of money, treated differently tax wise in one account.
Why don't you get informed and talk to a tax professional rather than make assumptions and scare yourself (unless you enjoy the fear). Knowledge is power.
I guess some companies allow you to contribute to either and take that into account, mine doesn't. But THE COMPANIE'S MATCHING contribution must not go into any sort of ROTH Account, including ROTH 410k account. So if you have a traditional 401k & Roth 401k offered, the company match always goes into the traditional 401k
IRS Website
Designated Roth Accounts-Contributing To Designated Roth Accounts
Matching contributions and forfeitures
Question: Will employers typically make the same matching contribution to a Roth 401(k) as they would to a traditional 401(k), and if so would it be pre- or post-tax? —A.C.
Jeffrey Levine, chief retirement strategist and director of retirement education at Ed Slott and Company, offered the following response:
As far as the match goes, the employer doesn’t care where you make your salary deferrals. Whether you make them to the traditional side of your plan or the Roth side of the plan, your match—if applicable—will be the same.Furthermore, regardless of where you make your salary deferral, your match will always be made to the traditional side of the plan Q&A: How do employers match contributions to a Roth 401(k)? - MarketWatch
TruckeeWannabee, uh, I believe what you posted doesn't even support your own point. Instead it's the other way around. It shows Lowexpectations' was correct.
The employee can put their contribution into EITHER the Roth or Trad side of the 401k. But the EMPLOYER match must always go into the TRADITIONAL side. I believe that's all Lower was trying to say.
As for being required to pull from both 'balances' in the Roth 401k:
I found this regarding gov't TSP's (the fed version of a 401k) and am still looking to find it regarding regular Roth 401ks.
"These two balances will keep your contributions, earnings, and any money you transfer into (or out of) your TSP account separate for tax purposes, but any loans, withdrawals, contribution allocations, and interfund transfers you make will include a proportional amount from each balance.You will not be able to take out, borrow from, or change the investment of, just one balance. Also, you will not be able to convert one type of balance into another."
My point is just that IF, the same proportion -- for whatever reason isn't taken out -- there could be consequences, perhaps a penalty? What happens when you don't take out enough money as an RMD, isn't the a penalty for that? In my mind, it's just another slight factor that's all.
TruckeeWannabee, uh, I believe what you posted doesn't even support your own point. Instead it's the other way around. It shows Lowexpectations' was correct.
Yes I thought we had gotten past that with post #51 where Moxie responded to you. I apologize, probably my fault.
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The employee can put their contribution into EITHER the Roth or Trad side of the 401k. But the EMPLOYER match must always go into the TRADITIONAL side. I believe that's all Lowerwas trying to say.
Yes it is what she said in post #51. I believe this is true. It is not my own experience with my employer. They'll only match whatever is contributed up to 4% to the traditional 401k. They pay no attention to my 401k Roth.
Quote:
As for being required to pull from both 'balances' in the Roth 401k:
I found this regarding gov't TSP's (the fed version of a 401k) and am still looking to find it regarding regular Roth 401ks.
"These two balances will keep your contributions, earnings, and any money you transfer into (or out of) your TSP account separate for tax purposes, but any loans, withdrawals, contribution allocations, and interfund transfers you make will include a proportional amount from each balance.You will not be able to take out, borrow from, or change the investment of, just one balance. Also, you will not be able to convert one type of balance into another."
My point is just that IF, the same proportion -- for whatever reason isn't taken out -- there could be consequences, perhaps a penalty? What happens when you don't take out enough money as an RMD, isn't the a penalty for that? In my mind, it's just another slight factor that's all.
This is an amateur guess here....but I believe this is relating to Capital Gains Taxes. They want to ensure you are holding your assets for a specific amount of time and are assuming you are contributing somewhat equal balances to each account. I could be very wrong here
But just for information-
If you are in the 10-15% tax bracket, you pay no Long Term Capital Gains on the withdraws if the withdraws are minimal enough to keep you in the 10-15% tax bracket. This means holding your investments for 1 yr+1 day (or longer). https://www.fool.com/retirement/2017...ower-rate.aspx
Yes there is a penalty for not taking out a specific amount of $$ or more when you hit 70 1//2. There are online RMD calculators online for use.
Location: Was Midvalley Oregon; Now Eastside Seattle area
13,066 posts, read 7,502,913 times
Reputation: 9791
We did have. Spent it all on buying a retirement home's down payment.
I am going wait to later in 2017 to see if we want to replenish Roth within the 60 day window or do taxable accounts.
Age 67/70. Retired. 25% marginal tax.
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