Roth 401(k) Savings Opportunity
If you think the only way to save for retirement is with pre-tax dollars, think again. The News Corp Roth 401(k) lets you contribute after-tax dollars, which grow tax-free and are not taxed when you use the money in retirement.
The Roth 401(k) is similar to the traditional 401(k) in that:
- You can elect how much of your salary you wish to contribute.
- Your contributions to a Roth 401(k) and pre-tax 401(k) cannot exceed IRS limits.
- Your contribution is based on your eligible compensation.
- You will make your elections through Fidelity NetBenefits.
Plus, the Roth 401(k) includes the same company match that applies to our traditional 401(k), and features the same investment options as the traditional 401(k).
The difference is, in the traditional 401(k) the pre-tax contributions you make now are taxed when you withdraw the money for use in retirement. Your contributions to the Roth 401(k) are made with after-tax dollars, which allows you to withdraw your money tax-free when you retire.
Three reasons to consider the Roth 401(k)
- It can help reduce your taxable income in retirement. You may have multiple sources of taxable income in retirement, including a Social Security benefit, traditional 401(k) withdrawals and investment income from a taxable brokerage account. The more taxable income you have, the more taxes you pay. Combining tax-free withdrawals from a Roth 401(k) with withdrawals from a traditional 401(k) can help keep your overall taxable income down, and that’s a good thing.
- There are no required minimum distributions. When you reach age 70 1/2, you must start taking withdrawals from your traditional 401(k) (and IRAs) and you’ll pay taxes on that money, even if you don’t need it immediately. There are no withdrawal requirements with the Roth 401(k).
- A dollar in a Roth 401(k) could be worth more than a dollar in a traditional 401(k)*. The after-tax dollars you put in a Roth 401(k) grow tax-free and withdrawals are tax-free, so you have the full balance of the account available to spend in retirement. And while paying taxes up front might be more painful, you may end up with more money in the end.
Still not sure you want to contribute? Here are two more things that differentiate the Roth 401(k) — it can be passed on to heirs, and it could help you hedge against future tax code changes.
Learn more
To enroll in the Roth 401(k) visit www.netbenefits.com.
*Depending on your income level at the time of contribution vs at the time of withdrawal and other factors.