Roth Option Available for Qualified Retirement Plans

A Roth option for 401(k) and 403(b) accounts is now available at Pershing for existing and new qualified retirement plans. The Roth option is not a new type of plan—it is a new “contribution type” that can be accepted by new or existing 401(k) and 403(b) plans and can be an attractive employee benefit. The Roth option is expected to appeal to plan participants—especially highly compensated employees—who want to make contributions with after-tax dollars in lieu of or in addition to the pre-tax dollars they contribute to their traditional 401(k) or 403(b) accounts. Before the Roth 401(k) and 403(b) option became available, highly compensated individuals were ineligible to contribute to a retirement account with after-tax dollars, such as a Roth IRA, due to income restrictions.

Deepen Your Relationships with Business Owners

Talk to your plan sponsor clients who already offer Individual(k), 401(k) or 403(b) plans today about offering the new Roth contribution option as a way to enhance their own retirement savings and, for those with employees, attract and retain employees. Also, reach out to clients who own small businesses that may benefit from offering a qualified retirement plan.

According to The Secret Knock: Unlocking the Retirement Opportunity, a recently released independent study from Pershing, investment professionals who work with small business owners can capitalize on the crossover opportunities that exist among their clients. Specifically, 61% of small business owners have the same investment professional advising them on their personal finances as well as for their business retirement plan assets. Of those working with different investment professionals, 38% would consolidate with one financial professional.

Getting Started

All materials for amending plans and establishing new plans can be accessed in the Material Catalog under Resources in NetX360™.

For Existing Plans:

  • Plan sponsors who want to offer a Roth option to participants must amend their plan’s adoption agreement to add this feature by the end of the plan year in which the designated Roth contributions are first effective. Once a plan sponsor has amended the agreement, participants may begin making Roth contributions.
  • Plan sponsors need to complete an Adoption Agreement Amendment Request form which is available in the Material Catalog, keyword search 401(k).

For New Plans:

  • Plan sponsors who are offering a new plan should complete the 401(k) Plan Design Questionnaire (PDQ) or Individual(k) Plan Establishment Kit, which are available in the Material Catalog, keyword search 401(k) or Individual(k).
  • An updated Qualified Retirement Plan and 403(b) Distribution Request form and a Roth Conversion Request form are also available in the Material Catalog.

For More Information

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