Who's Eligible for the Roth 401k/403b?

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Beginning in 2006, you can contribute to a Roth account if these two things are true:

• You are eligible to contribute to your company's 401k or 403b plan, and
• Your company 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 Roth 401k or 403b 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 403b account, you're allowed to put some or all of that money into a Roth account instead — if your company offers these accounts.

Available at many companies, but not all

Companies that have 401k plans are allowed to add this feature but they are not required to do so. Why don't all companies offer these accounts? There are some costs associated with implementing the change, and ongoing maintenance costs as well. Some companies want to see how popular these accounts are before they incur the costs. Others postponed the decision because the Treasury took so long to provide guidance on how to run these plans. It seems likely that many more companies will add this feature as they hear demand for it from the plan participants.