401k Roth Contributions
Have you ever heard of a 401k plan not allowing 401k Roth contributions due to the existence of a traditional IRA in the client’s name? We have a client that was told by her HR dept. that she cannot make 401k Roth contributions because she has a Traditional IRA. We cannot come up with any reasonable explanation for this supposed rule. Any insight or guidance would be appreciated.
Permalink Submitted by Alan - IRA critic on Wed, 2015-11-18 23:10
That makes no sense. If the plan has a designated Roth option, IRA balances in any type of IRA have no bearing on making contributions to either the traditional 401k or the Roth 401k accounts. HR should not even be asking whether the client has an IRA or if they are contributing to it. Of course, if the client has already maxed out the traditional 401k for the year (18k plus catch up), then Roth 401k contributions would not be allowed.