A Roth 401(k) option is an employer sponsored investment savings account that you contribute to with after-tax money. The Kentucky Public Employees’ Deferred Compensation Authority (KDC) Roth 401(k) Savings and Investment Plan allows State employees to get the same benefit, through a program that is specifically tailored to the needs of Kentucky public employees.
When you contribute to the KDC Roth 401(k) plan, you pay taxes immediately. Withdrawals taken after you reach age 59½ will be tax-free if the account has been funded for at least five years.
Remember, investing involves market risk, including the possible loss of the money you have saved. As you get started in the plan, we will help you understand market risk and strategies that may help you deal with it.
Additional Roth 401(k) features
In addition to after-tax investing, the Roth 401(k) plan also offers these features, and more:
- Contributions are made after taxes – you can fund your account with after-tax money allowing you to owe no taxes on qualified distributions. See the plan comparison chart (PDF) for details.
- Catch-up contributions – you can take advantage of your remaining years of earning income with two special provisions designed to help participants nearing retirement invest even more. Catch-up contributions in Learning Center allow eligible participants to contribute more than the normal annual deferral limits and there are two kinds are available – Age 50+ Catch-up and Special 457 Catch-up. Both options are tax deferred until withdrawal when they are taxed as ordinary income. Only one of the catch-up options can be utilized per plan each year.
- Age 50+ Catch-up – if you will be age 50 or older by the end of the tax year, you use this option and defer up to an additional $5,500 over the normal deferral limit.
- Special 457 Catch-up – if you are within the three years prior to your designated Normal Retirement Age,* you may be eligible for catch-up contributions up to two times the maximum contribution limit to make up for under contributing in the past.
- Rollovers – you can roll money into your Roth 401(k) but only a direct rollover from another Roth 401(k) or Deemed Roth IRA account. See the plan comparison chart (PDF) for more information.
For a complete look at all of the KDC Roth 401(k) plan features, benefits and restrictions take a look at the plan comparison chart (PDF).
Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds. Assets rolled over from your account(s) may be subject to surrender charges, other fees and/or a 10% tax penalty if withdrawn before age 59½. Neither Nationwide® nor any of its representatives give legal or tax advice. Please contact your legal or tax advisor for such advice.
Get the help you need
Talk to one of our local Plan Service Representatives if you have questions about plan options.
*Normal Retirement Age is typically the date you choose for the purpose of initiating your Special 457 Catch-up election. This date must occur no later than age 70½, be no earlier than the year you would be entitled to full retirement benefits with no reduction for age or service, and meet the parameters of Normal Retirement Age according to KDC.