Each of your workers has a unique story, and some demographics in particular may benefit from Roth options in the company’s retirement plan. Young workers, employees in lower tax brackets, and even highly compensated employees may want to consider Roth, in which contributions are deducted from wages after payroll taxes are factored in. They do not reduce a participant’s taxable income in the year he or she contributes in a plan.
Under the expanded Roth conversion rule, which went into effect in 2013, participants can convert any of their plan assets to a Roth account within the plan, even if they are not eligible for distribution. Plan sponsors should consider whether their employees would be interested in this option, as it may provide tax benefits and help with retirement readiness. Enlist the help of your advisor to determine if your plan could benefit from adding or expanding Roth options.