Deep within the American Taxpayer Relief Act of 2012 (the fiscal cliff deal), Congress enacted rules to make the Roth 401(k) option more accessible for retirement savers.
What is the Roth 401(k) you ask? Well, think Roth IRA inside your 401(k) account.
Originally authorized in 2010, this option for defined contribution retirement plans was devised to allow after-tax contributions that grow tax-free until disbursement in retirement, subject to certain stipulations (age 59.5 and at least five years since the account was established), just like the familiar Roth IRA.
Until now, however, making conversions from traditional plans into a Roth 401(k) was somewhat difficult and subject to many restrictions.
In adopting the tax increase plan at the end of the year, Congress included new rules that make the conversion process much easier and available to many more plan participants.