A Roth 401k plan is a government initiated company sponsored individual savings plan. Contributions are made on a non-deductible basis--The Roth 401k plan has tax free qualified distributions--The long-term benefits of owning a Roth 401k plan are superior to a traditional 401k, but the traditional 401k is better in the tax deductible contribution phase.
The 6 Roth 401k Advantages & Rules Discussed in this Article.
1. The Roth 401k plan tax structure is unique versus the traditional 401k, contributions are post-tax.
2. Qualified distributions from a Roth 401k plan are income tax-free.
3. There is no income limit for contributions into a Roth 401k.
4. Since withdrawals are not reportable income, the Roth 401k plan won't affect your adjusted gross income during retirement.
5. The Roth 401k plan is a good retirement and estate planning tool.
6. The Roth 401k could be rolled over into a Roth IRA.
Roth 401k is a 401k account that functions much like a Roth IRA. The Roth 401k plan is a post tax contribution where qualified distributions are tax free. The Roth does not allow deductible contributions.
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