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Federal Government Gives Workplace Roths A Big Push With Roth TSPs

Wednesday, May 9, 2012 - 4:51 PM
From Reuters
Roth workplace accounts, which have grown more popular in recent years, are about to get a shot in the arm from Uncle Sam. This week the federal government started rolling out a Roth option to 3.3 million employees who participate in its main retirement program.

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The government is calling this Roth TSP, and it issued this press release
Agencies and services can now begin accepting elections for Roth (after-tax) contributions. The Roth TSP feature gives participants greater flexibility in the tax treatment of their accounts. Roth contributions are tax-free when withdrawn, and their earnings are also tax-free (as long as IRS requirements are met).

Outside of the government, Roth workplace accounts are commonly known as Roth 401(k) plans. The official name at the IRS is a Designated Roth account which can be in a 401(k), 403(b) or a governmental 457(b) plan. The IRS has the details of these accounts at this page.
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