How should a Solo 401(k) Plan Trustee administer a 401(k) Plan with Roth Contributions?

February 4th, 2013

A trustee of a Solo 401(k) Plan with a qualified Roth contribution program must establish separate accounts including only designated Roth contributions and “earnings properly allocable to the contributions,” and the plan administrator must maintain separate records for these accounts. Since distributions from accounts containing elective deferrals are included in distributees’ gross income, while distributions from accounts containing designated Roth contributions are generally excluded from gross income, an employee’s designated Roth contributions cannot be commingled with elective deferrals. Forfeitures may not be allocated to Roth accounts.