In short
A designated Roth account lets employees make after-tax Roth contributions within a 401(k), 403(b) or governmental 457(b) plan. Qualified distributions, including earnings, are tax-free.
Key takeaways
- Unlike Roth individual retirement accounts, there is no income limit on contributing.
- A qualified distribution needs 5 years in the account and age 59½, death or disability.
- Since 2024, these accounts need no required minimum distributions during the owner's life.
Where it's tested
TCP: Retirement Planning Strategies — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A taxpayer has $90,000 in traditional IRAs, of which $9,000 represents nondeductible (after-tax) contributions. The taxpayer converts $10,000 to a Roth IRA. How much of the conversion is taxable?