The rules for company-sponsored retirement plans change all the time. For example:
After Congress passed the American Taxpayer Relief Act (ATRA) in 2013, some important rules regarding Roth 401(k) plans and other benefits changed.
Make sure your Finance staffers are on top of those changes. Test their knowledge by having them review these statements and and answer True or False.
Then check their responses against the answers below.
1. Under the ATRA, employers can once again provide employees with up to $4,250 in tax-free undergraduate and graduate educational assistance each year.
2. If a company offers a Roth 401(k), employees can now convert their traditional 401(k) to a Roth plan at any time.
3. The fiscal cliff deal increased the max pre-tax contribution employees can make to $320 per month.
Answers to the quiz
1. False. Employers can once again provide employees with up to $5,250 in tax-free undergraduate and graduate educational assistance each year.
In addition to bringing this benefit back, the ATRA made it permanent, as well.
2. True. If a company offers a Roth 401(k) – or a 403(b), 457(b), etc. – employees can convert their traditional plan into a Roth option at any time. Previously, employees were only able to make this type of conversion if they retired, changed jobs or were at least 59 and 1/2.
3. False. Under the ATRA, the max pre-tax contribution employees can make to mass-transit expenses was increased to $240 per month. Previously, it had been $125 per month.
