Thanks to Kim Blanton writing in the Squared Away Blog for explaining the complexities of taxes on withdrawals from Roth 401(k) plans.
“Financial experts and writers often tout the Roth 401(k)’s main selling point: when the money is withdrawn in retirement, it won’t be taxed.
Well, that’s not entirely true.
An employee’s own money saved in his Roth account over the years is, indeed, shielded from income taxes when he retires and starts pulling out the money. That’s because the worker had paid the taxes before he put the money into the Roth.
But employer contributions to Roths are different. Employer contributions and any resulting investment earnings are taxed as income in the year that the money is withdrawn.”
Read the details at: http://squaredawayblog.bc.edu/squared-away/know-about-the-roth-401k-surprise/
Source: Financial Planning for Women