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Rochester, NY (October 2, 2006) - Paychex, Inc. has added a Roth 401(k) feature to its suite of retirement services. The Paychex Roth 401(k) feature offers small and medium-sized businesses another way to save for retirement. Roth 401(k) contributions are funded with after-tax dollars, but withdrawals can generally be tax-free when withdrawn at retirement. With a traditional pre-tax 401(k), participants contribute with pre-tax wages, and then pay taxes when the money is withdrawn.
The Paychex Roth 401(k) feature is another tool that plan sponsors and their participants can use to create a broader retirement planning package.
"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, Paychex Human Resource Services vice president of sales. "The Roth may also be a good fit for highly paid workers who want to manage their tax burden in retirement. For employers looking to add the Roth 401(k) feature to their plans, Paychex 401(k) Recordkeeping service seamlessly handles the integration between payroll and 401(k) deductions."
Workers may contribute a maximum of $15,000 during 2006 to qualified retirement plans; those over 50 may make an additional $5,000 catch-up contribution. The amounts contributed can be divided in any manner between the pre-tax and Roth contributions. Unlike a Roth IRA, there are no income restrictions for individuals making contributions to a Roth 401(k). The Roth 401(k) was created by the Economic Growth and Tax Reconciliation Act of 2001, and made permanent by the newly signed Pension Protection Act of 2006.
Paychex's retirement services are designed to meet the needs of small- to medium-sized businesses and include traditional and Roth 401(k), 401(k) safe harbor, owner-only 401(k), 401(k) SIMPLE, SIMPLE IRA, and profit-sharing plans. Additional information is available on the Paychex Web site at http://www.paychex.com.
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