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This option allows employees to make after-tax contributions to 401(k) Roth account. Qualified distributions of Roth 401(k) contributions and earnings are tax-free.
You can make Roth 401(k) after-tax contributions regardless of income.
The Internal Revenue code contribution limit applies to the combination of your 401(k) pre-tax and Roth 401(k) after-tax contributions, ($19,500 for 2020, $26,000 for age 50+).
Qualified distributions of Roth 401(k) contributions and earnings are tax free if distributions are made:
after age 59 1/2; death or disability, and
at least 5 years after the year in which you made your first Roth 401(k) contribution or Roth In-Plan Conversion as described below.
In addition, the Foundations 401(k) Plan will accept Roth 401(k) rollovers; and Roth 401(k) distributions can be rolled into a Roth IRA. However, you cannot roll Roth IRA balances into the 401(k) plan.
For more information view the
Roth 401(k) presentation.
The Roth 401(k) option offers “tax diversification” for distributions. That is, distributions of pre-tax contributions and associated earnings are subject to ordinary income tax, whereas “qualified” distributions of Roth 401(k) after-tax contributions and associated earnings are tax free.
The Roth 401(k) Analyzer can help you decide which contribution type…or combination of contributions…is best for you.Use the Roth 401(k) Analyzer
Eligible participants in the Farm Credit Foundations Defined Contribution / 401(k) Plan (the "Plan") are able to convert any vested (non-Roth) portion of their Plan account into a designated Roth account within the Plan. Any tax-deferred funds you convert using this option will be included in the your gross income for the calendar year in which the conversion is made.
Learn More About In-Plan Conversion