Page 29 - Brady Corporation 2021 Annual Benefits Connecticut

Roth 401(k) option offers
tax-free retirement income
About the Roth 401(k) option: Your retirement savings plan
gives you the option of contributing to a 401(k). Does a Roth 401(k)
make sense for you?
An additional way to save in your plan
ACTION PLAN
Unlike a traditional pretax 401(k), the Roth 401(k) allows
• Read this information about the Roth 401(k) option
you to contribute after-tax dollars to your account and
• Contact a tax professional for specific advice
then withdraw tax-free dollars when you retire.* The
on your personal situation
following information can help you decide whether the
Roth 401(k) makes sense for you.
How the Roth 401(k) compares with a traditional
Taxes: Pay now or pay later
pretax 401(k)
Traditional
Just as with a traditional pretax 401(k):
Roth 401(k)
Pretax 401(k)
• You elect how much of your salary you wish to contribute.
After-tax
Employee
Pretax dollars
• Your combined contributions to a Roth 401(k) and a
contributions
dollars
traditional pretax 401(k) cannot exceed IRS limits.
Taxable upon
Tax free upon
Employee withdrawals
withdrawal
withdrawal*
• Your contribution is based on your eligible compensation.
Unlike a traditional pretax 401(k), the Roth 401(k) allows
provided the five-year aging requirement has been satisfied and one of
you to withdraw your money tax free when you retire.* But
the following conditions has been met: age 59½, disability, or death.
it will also require you to make after-tax contributions now.
Who might benefit from a Roth 401(k)?
• Younger employees who have a longer retirement horizon
and more time to accumulate tax-free earnings.
• Highly compensated individuals who aren’t eligible for
Roth IRAs, but who want a pool of tax-free money to draw
on in retirement.
• Employees who want to leave tax-free money to their heirs. *A distribution from a Roth 401(k) is federal tax free and penalty free,
Brady Benefits Guide
Roth vs. Traditional 401(k)
Roth 401(k) Option Offers Tax-Free Retirement Income
Your retirement savings plan gives you the option of contributing to a 401(k). Does a Roth 401(k) make sense
for you?
An Additional Way to Save in Who Might Benefit from a Roth
Your Plan 401(k)?
Unlike a traditional pretax 401(k), the Roth 401(k) „ Younger employees who have a longer retirement
allows you to contribute after-tax dollars to your horizon and more time to accumulate tax-free
account and then withdraw tax-free dollars when you earnings.
retire.* The following information can help you decide „ Highly compensated individuals who aren’t
whether the Roth 401(k) makes sense for you. eligible for Roth IRAs, but who want a pool of tax-
free money to draw on in retirement.
How the Roth 401(k) Compares with „ Employees who want to leave tax-free money to

a Traditional Pretax 401(k) their heirs.
Just as with a traditional pretax 401(k):
Taxes: Pay Now or Pay Later
„ You elect how much of your salary you wish to Traditional Pretax Roth 401(k)
contribute. 401(k)
„ Your combined contributions to a Roth 401(k) and Employee Pretax dollars After-tax dollars
Contributions
a traditional pretax 401(k) cannot exceed IRS Employee Taxable upon Tax free upon
limits. Withdrawals withdrawal withdrawal*
„ Your contribution is based on your eligible *A distribution from a Roth 401(k) is federal tax free and penalty free,
compensation. provided the ive-year aging requirement has been satisied and one of
the following conditions has been met: age 59½, disability, or death.
Unlike a traditional pretax 401(k), the Roth 401(k)
allows you to withdraw your money tax free when you
retire.* But it will also require you to make after-tax
contributions now.
Action Plan
„ Read this information about the Roth 401(k) option
„ Contact a tax professional for speciic advice on your
personal situation

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