Most retirees want more predictable monthly income. It brings a degree of solace and confidence for the future. For some seniors, it removes the angst and stress over finances. It may even be an issue of product suitability based on the retiree’s financial profile and risk tolerance. So, what if you could use your 401(k) as a tax-mitigation tool to deliver more net spendable income?

Did you know non-deductible 401(k) contributions could be rolled into a Roth at retirement? Funds may be rolled into a regular Roth IRA from a designated Roth account that is part of a 401(k) plan and it’s not a taxable event. To boot, the filing status and MAGI limitations normally applicable to regular Roth contributions do not apply.1

Overfunding your 401(k) may be just the option you’re looking for if you want more income during retirement. It could provide you with access to extra Roth dollars during retirement you could rely on. When assessing overall participant usage of a Roth 401(k) feature, 7.4 percent of participants elected that very option, according to a study by Hewitt Associates.2

By making after-tax contributions that are eventually converted to Roth IRA assets, investors—like you—can build a higher level of Roth assets than is currently allowed with direct Roth IRA and 401(k) contributions. Watch the interview about maximizing 401(k) rollovers with investment adviser representative adviser Eric Judy.

But you have to be careful—you cannot do this as an in-service distribution. It typically can only be done at separation and not every plan allows for after-tax contributions, so be sure to check with your plan administrator.

When designing your retirement income strategy, it’s best to enlist the help of an financial adviser to ensure you’re on track to reach your goals within the time frame allotted. After all, don’t we all want to get the most out of our retirement dollars we’ve worked so hard for?

1 The Small Business Jobs Act of 2010 authorized 457(b) governmental plans to add a designated Roth account option, effective January 1, 2011.


Nationally syndicated financial columnist and talk show host Steve Savant interviews Investment Adviser Representative Eric Judy co author of The New Retirement, a Paradigm Shift on the weekly consumer video show Right on the Money. Right on the Money is an hour talk financial show for consumers and distributed its 5 ten minute segments as video press releases to over 280 national outlets.