Who’s Eligible for a Designated Roth Account?
By Kaye A. Thomas
Current as of November 17, 2013
There are just two requirements.
You can contribute to a Roth account where you work if these two things are true:
- You are eligible to contribute to your employer’s 401k or similar plan, and
- Your employer has chosen to make Roth accounts available.
No income limits
The tax law says you can’t contribute to a Roth IRA if your income is too high, but those limits don’t apply to designated Roth accounts. The only limits that apply to these accounts are the ones that apply to traditional accounts. If you’re allowed to contribute to a traditional 401k or similar account, you’re allowed to put some or all of that money into a Roth account instead — if your employer offers these accounts.
Available from many employers, but not all
Employers that have 401k and similar plans are allowed to add this feature but they are not required to do so. Why don’t all employers offer these accounts? There are some costs associated with implementing the change, and ongoing maintenance costs as well. Some employers want to see how popular these accounts are before they incur the costs. It seems likely that many more employers will add this feature as they hear demand for it from the plan participants.