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Those people who are considering retirement savings plans must also take not of the Roth 401k that became effective in 2006. The Roth 401k is really a cross between the Roth IRA, a.. and the standard 401k. A traditional 401k program is an agreement under tax law by which a company can withhold pre-tax money out of your salary and it can be invested by the employee. In a traditional 401k this money is nontaxable until you withdraw it, at which time youll be in a lower tax bracket. Those people who are looking at retirement savings plans must also consider not of the Roth 401k that became effective in 2006. The Roth 401k is just a hybrid between the Roth IRA and the standard 401k, and was legislated in George W. Bushs tax cut package. It operates differently than the traditional 401k plan. Below is a description of the pros and cons of the Roth 401k The bad news - Favorable tax treatment limited to those who are incapable, or at the least 59.5 years old, or who have kept the account for over 5 years - its not available to people with an income above a specific level during the time their account is opened. - There is no up-front tax discount - employees whose companies do not offer Roth 410k plans are ineligible - Not many companies offer Roth 401k programs because it is new, and because it is expensive to introduce. The good news - Any employee whose employer offers the program is eligible. - Withdrawals taken after retirement are no subject to income tax - It could be rolled over in to a Roth IRA if you leave your job. - Theres no loss of eligibility for after your account is opened if your income exceeds maximum eligibility restrictions. Click here consumers to explore where to allow for it. - Because of the deferred tax benefits, Roth 401k accounts could appreciate faster than a traditional plan, leading to greater retirement income. This design makes the Roth 401k ideal for youth who expect their money to develop over time. A normal 401k strategy will leave you additional money now, but a 401k will leave you better off after retirement..