Yes January 1, 2005 is rapidly approaching and with it the new Roth 401k will finally be available.
It offers to the 401k investor the advantages of escaping taxes on the growth of their 401k contributions just like the Roth IRA program has for individual IRA investors. I predict it will soon grow to be a major factor in many investors’ retirement plans. The growth of individual Roth IRA investor programs will pale beside what the Roth 401k’s are going to do. Finally we have a good investment vehicle that offers tax advantages as well as allows for decent contributions and it’s available to many if not most workers. It’s going to take off as soon as the investors realize what an opportunity it is.
Remember there’s going to be a lot of pressure on individual investors over the next two or three years to find their own security with Social Security benefits being placed in jeopardy. Doubt, Social Security, and retirement planning don’t go well together. (By the way stay tuned for an article coming soon on this blog that will discuss the Social Security issue in depth.)
Remember there’s no indication that any “private accounts” that end up being created under Social Security will escape taxes or experience good grow so stake out your claim on the future and contribute as much as possible to any IRA and 401k programs that you have available. (More coming soon on how to tell if your 401k is a good one and the danger that it is being under funded by your employer.)
Also remember only about 1/3 of the employers now offering 401k programs are signed on to offer Roth 401k’s on the January 1st start date.
If your employer isn’t one of them now is the time to start asking “Where’s my Roth 401k. Show me my Roth 401k.” You need to have the option to be able to make either Roth 401k contributions or standard 401k contributions based on your needs. Even if the Roth isn’t best for you right now that may change in the future so keep your options available!
Remember you need check out the new Roth 401k investment opportunity and see if it’s not something you should be investing in BEFORE January 1 so you have time to act as soon as it’s available too you.