Roth IRA: Contributions

If an individual’s only participation in a retirement plan is through non-deductible designated Roth contributions to a designated Roth account, can the individual make a deductible IRA contribution regardless of the amount of income, or do the active participant rules apply?

You can contribute to a traditional IRA, up to the maximum IRA limit, whether or not you are an active participant in a plan. You will want to follow the rules of Code 219 to determine whether the individual con deduct a contribution to a traditional IRA. Whoever make a designated Roth contribution to a [...]

If an employer offers designated Roth contributions to one participant in a 403(b) plan, must the employer offer them to all other participants in the plan?

Your employer must offer Roth contributions to all participants under the universal availability requirement of 403(b)(12), if you are given the opportunity to designate 403(b) elective deferrals as designated Roth contributions.

Can an you make a designated Roth contribution on your spouse’s behalf if the spouse has no earned income, as permitted with a spousal IRA account?

Unfortunately you cannot contribute to a Roth 401(k) or 403(b), but an you can contribute to a traditional or Roth IRA on behalf of you spouse based on your spouse’s income.

Can a plan automatically enroll an employee into making designated Roth contributions if the employee fails to decline participation?

Absolutely, the employer will automatically withhold elective deferrals from your pay, if a plan that provides a cash or deferred election unless the employee does not want to participate. If your plan has both tradition, pre-tax elective contributions and designated Roth contributions, your employer must follow what your plan states on how to allocate you [...]

Can employers allocate plan forfeitures to designated Roth accounts?

Your employer can only designate Roth contributions and rollover contributions to designated Roth accounts. Your employer is not allowed to allocate forfeiture, matching or any other employer contributions to any designated Roth accounts. Can an employee change his or her mind and have designated Roth contributions treated as pre-tax elective contributions? Designated Roth contributions are [...]

Can an employer match an employee’s designated Roth contributions? Must the employer allocate the matching contributions to a designated Roth account?

On Designated Roth contributions your employer can match the amount in which you designated to your Roth IRA. The only stipulation is that your employer must designate the contribution into your designated Roth account. Your employer must allocate contributions that will match designated Roth contributions in a pre-tax account. This will be the same as [...]

When must an employee be able to elect to make designated Roth contributions?

You must have at least one opportunity during each plan year to make a change to your designated Roth Contribution. Your plan must state the rules governing the frequency of the elections. Pre-tax and designated Roth contributions rules must apply in the same manner. Before you can place any money in your designated Roth account, [...]

Can an employee make age-50 catch-up contributions as designated Roth contributions to his or her designated Roth account?

If the person is age 50 or older by the end of the year then, yes the plan allows you to make catch-up contributions Can an individual make the maximum contributions, including catch-up contributions, to both a designated Roth 401(k) or 403(b) account and a Roth IRA in the same year? If you are age [...]

Is there a limit on how much an employee may contribute to his or her designated Roth account?

Yes, $16,500 for the year 2009, plus an additional $5,500. These amounts include combined amounts contributed to all designated Roth accounts and traditional, pre-tax accounts in any one year for any individual. (under Code 402(g)). You may catch-up contributions if you are age 50 or older at the end of the year. Cost of living [...]

What is a designated Roth contribution?

An elective deferral in to a designated Roth an employee can make to a 401(k) or 403(b) plan. The Designated Roth contribution an employee designates a deferral as an after-tax contribution. The employer must deposit the contribution into a designated Roth account. (This contribution is irrevocable.) This means the employer includes the amount of the [...]