Flex Your 401(k): Roth Option

U.S. employers are starting to offer a new kind of retirement savings plan that allows workers to withdraw money tax-free.

The Roth 401(k) combines features of the traditional 401(k) with those of the Roth individual retirement account. As with the Roth IRA, contributions are made to Roth 401(k)s with after-tax dollars. While you won't get an upfront tax-deduction, the account will grow tax-free, and withdrawals taken during retirement will not be subject to income tax, provided you're at least 59 1/2 and you've held the account for five years or more.

But unlike Roth IRAs, which are subject to income limits, depending on your tax filing and marital status, employees can contribute to a Roth 401(k) regardless of how much they earn. ...