Treasury Finalizes Proposed Regulations, Issues New Proposed Regulations, for Roth Contributions to 401(k) and 403(b) Plans

In March 2005 the Treasury Department issued proposed regulations that provided guidance on the establishment and implementation of designated Roth contribution accounts in 401(k) plans. Recently these proposed regulations were finalized, with certain clarifying changes. While the final regulations set forth basic and definitional rules for a designated Roth program under a 401(k) plan, they do not address the taxability of distributions from designated Roth accounts or the reporting or recordkeeping requirements applicable to these accounts. These areas are addressed under a new set of proposed Treasury regulations recently issued, which also provide for the establishment of Roth contribution accounts in 403(b) plans.

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