Whether you sponsor a large or small 401(k) plan, the addition of a Roth in-plan conversion feature may be viewed by your executives as an important tax planning tool. A major benefit of Roth accounts is that vested balances residing in the accounts for five or more years may be withdrawn tax free (contributions and earnings) when a distributable event occurs.
Roth in-plan conversions are a unique tax planning tool since they are the only investments I can think of where the investor has control over when an investment is taxed, without actually having to liquidate the investment. Normally, tax on an investment is triggered when it is sold, not re-characterized into a different account or form. Consider these other reasons to offer a Roth in-plan conversion feature in your 401(k) plan:
