Retirement Plans - Roth

Back to: Retirement Plans in Moneytree Plan

These include Roth IRA, Roth 401k, and Roth 457. Individual contributions are made after-tax. As a result, the withdrawals are not taxable, including the growth. Moneytree Plan does not calculate penalty taxes for early withdrawals from Roth accounts. Because only the growth is subject to penalties, the program assumes the balance from contributions is enough to cover expenses in rare cases where withdrawals occur prior to age 59.5.

Employer Sponsored

Contributions are split between personal and company contributions. These contributions can be entered either as a monthly dollar amount, or as a percentage of salary. The percent of salary only applies to the salary and wages, not self employment income.

Personal contributions are made after-tax so future withdrawals are not taxed, including any growth. Company contributions go towards the tax-deferred balance, and must be taxed on withdrawal.

RMDs must technically be taken from employer sponsored Roth balances. They begin the year the individual turns 72 by default. For individuals deferring RMDs from working passed 72, they can be delayed by the corresponding input field in Assumptions > Other.

TIP: Many individuals simply roll over these Roth balances into Roth IRAs to avoid RMDs. To capture this in Moneytree Plan, simply show the personal contributions going into a Roth IRA asset, then create a separate tax-deferred retirement account to capture employer contributions. Since the program does not cap contributions, you can enter a value greater than the legal contribution limit to a Roth IRA.

Roth IRA

Individual Retirement Accounts allow for personal contributions. Company contributions, and contributions as a percent of salary cannot be entered.

There are no RMDs on Roth IRAs. The program will only withdrawal from Roth accounts for scheduled withdrawals or when needed to cover shortages. Read more about the withdrawal order in Moneytree Plan.