Do you participate in a 401(k), 403(b) or governmental 457(b) retirement plan that has a designated Roth account? If yes, did you know that you can:

• make after-tax salary contributions to the Roth account; and
• if the plan permits, roll over certain amounts in your other plan accounts to the Roth account.

Designated Roth contributions
Unlike pre-tax salary contributions, which are not taxed when you contribute them to the plan, you have to pay taxes on your Roth contributions. This means your gross income for the year you make Roth contributions will be higher than if you had made only pretax salary deferrals.

However, any pre-tax salary contributions and related earnings are taxable when you withdraw them from the plan. Roth contributions, on the other hand, are not taxed when you withdraw them from the plan. Earnings on Roth contributions are also not taxed when they are withdrawn from the plan if your withdrawal is a qualified distribution. A qualified distribution is a distribution that is made:

• at least 5 years after the first contribution to your Roth account; and
• after you turn 59½ or on account of your being disabled, or to your beneficiary after your death.

In-plan Roth rollovers
Your plan may allow you to transfer amounts to your Roth account in the plan if the amounts are:

• eligible rollover distributions from your other plan accounts; or
• any amounts, including those not otherwise eligible for a distribution, from your other plan accounts.

You must include in gross income in the year of transfer any previously untaxed amount you roll over to your plan’s Roth account.

You don’t include in gross income any withdrawal of the amount you rolled over to the Roth account. However, you may have to pay tax on the earnings on the rolled over amounts that are withdrawn, unless the withdrawal is a qualified distribution.

Check your employer’s plan to see if it has a Roth account and if it allows in-plan Roth rollovers.

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