Roth 401(k) Contributions

§ 402A. Optional treatment of elective deferrals as Roth contributions(a) General ruleIf an applicable retirement plan includes a qualified Roth contribution program—(1) any designated Roth contribution made by an employee pursuant to the program shall be treated as an elective deferral for purposes of this chapter, except that such contribution shall not be excludable from gross income, (2) any designated Roth contribution which pursuant to the program is made by the employer on the employee’s behalf on account of the employee’s contribution, elective deferral, or (subject to the requirements of section 401(m)(13)) qualified student loan payment shall be treated as a matching contribution for purposes of this chapter, except that such contribution shall not be excludable from gross income, (3) any designated Roth contribution which pursuant to the program is made by the employer on the employee’s behalf and which is a nonelective contribution shall be nonforfeitable and shall not be excludable from gross income, and (4) such plan (and any arrangement which is part of such plan) shall not be treated as failing to meet any requirement of this chapter solely by reason of including such program. (b) Qualified Roth contribution programFor purposes of this section—(1) In generalThe term “qualified Roth contribution program” means a program under which an employee may elect to make, or to have made on the employee’s behalf, designated Roth contributions in lieu of all or a portion of elective deferrals the employee is otherwise eligible to make, or of matching contributions or nonelective contributions which may otherwise be made on the employee’s behalf, under the applicable retirement plan. (2) Separate accounting requiredA program shall not be treated as a qualified Roth contribution program unless the applicable retirement plan—(A) establishes separate accounts (“designated Roth accounts”) for the designated Roth contributions of each employee and any earnings properly allocable to the contributions, and (B) maintains separate recordkeeping with respect to each account. (c) Definitions and rules relating to designated Roth contributionsFor purposes of this section—(1) Designated Roth contributionThe term “designated Roth contribution” means any elective deferral, matching contribution, or nonelective contribution which—(A) is excludable from gross income of an employee without regard to this section, and (B) the employee designates (at such time and in such manner as the Secretary may prescribe) as not being so excludable. (2) Designation limitsThe amount of elective deferrals which an employee may designate under paragraph (1) shall not exceed the excess (if any) of—(A) the maximum amount of elective deferrals excludable from gross income of the employee for the taxable year (without regard to this section), over