Paychex Adds Roth 401(k)

Paychex Inc., which provides payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses, has added a Roth 401(k) feature to its retirement services offering.

Employers could begin offering the Roth 401(k), a defined contribution plan allowing participants to make after-tax contributions toward their retirement saving, in January 2006. Workers can contribute a maximum of $15,000 during 2006 in any combination of pre-tax 401(k) or after-tax Roth 401(k) deferrals, with those over 50 permitted to make an additional $5,000 catch-up contribution.

The Roth plan type, originally permitted by the Economic Growth and Tax Reconciliation Act of 2001. The legislative “sunset’ for that provision, was removed by the recently signed Pension Protection Act of 2006.

“The Roth 401(k) may be the right savings vehicle for newly hired and younger workers who are in a lower tax bracket now, but expect their income and tax burden to grow as their career progresses,” said Tony Tortorella, vice president of sales, Paychex Human Resource Services, in a press release. “The Roth may also be a good fit for highly paid workers who want to manage their tax burden in retirement.”

For more information, go to http://www.paychex.com.