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null606
New Member

Is a 401K Roth Deferral the same as a Roth IRA?

 
2 Replies
SteamTrain
Level 15

Is a 401K Roth Deferral the same as a Roth IRA?

In what sense?

 

1)  At the point the contribution is made....NO. 

ROTH 401k contributions are made thru employer payroll deductions, and are only entered in the software when you put in your W-2 forms. They also have much higher contribution limits than ROTH IRAs.  A ROTH IRA is a separate account you have to set up yourself....almost always outside of your employer.

 

OR

2)  At the point where you take  distributions?   

<<Edited>>  OK , as noted below somewhat "similar" treatment at distribution.  Depends on the exact situation.

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
Opus 17
Level 15

Is a 401K Roth Deferral the same as a Roth IRA?

No, they are controlled by different sections of the tax law.  When Turbotax asks if you contributed to a Roth IRA and you had a designated Roth 401(k), the answer to the IRA question is No.

 

Also, the distribution rules are NOT identical, although they are very similar. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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