Roth 401(k) is Retirement Tool for Business Owners

Cynthia Umphrey
November 9, 2007 — 1,329 views  
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An important part of many business owners' exit strategy is to accumulate investments outside of their companies on a tax deferred basis. The Roth 401(k) may be a very valuable tool to assist owners in achieving this goal. Since 2006, Roth 401(k) programs have been a new retirement plan option. Under a Roth 401(k), an employee can elect to have all or part of his or her 401(k) salary deferrals contributed on an after tax basis. Since these contributions are made after taxes, the distributions are generally income tax free. Thus, the earnings in a Roth 401(k) may never be subject to income taxes. With a regular 401(k), income taxes are only deferred until distributions are paid out, and investment earnings come out as ordinary income. Roth 401(k) contribution limits for 2006 are: up to $15,000 for those under 50, and up to $20,000 for those 50 and over. As an employer, it is important to implement the right plan for you and for your employees. A Roth 401(k) provides significant additional flexibility over your current plan options. To maximize results, work with your advisors now to explore your options so that you will be ready for 2006. Your advisors can objectively review your company's unique factors and help you take advantage of new options as soon as they are available. Our exit planners can help you take the necessary steps to implement plans like Roth 401(k)s, and effectively reach your business and retirement goals. For further information regarding these matters, please contact Ms. Umphrey at 248.619.2591 or [email protected]

Cynthia Umphrey

Kemp Klein Law Firm

Cynthia Umphrey helps families and business owners make significant personal and professional life decisions. Ms. Umphrey calls upon over 10 years of experience in estate planning, probate administration, business structuring and business exit planning to guide you though life's most important choices.