More companies now provide another investing option for employees: the Roth 401(k). Allowed to offer this benefit since 2006, the Roth 401(k) is comparable to a regular 401(k) with one small difference: a regular 401(k) allows you to invest your money pretax, paying taxes at withdrawal, while the Roth 401(k) has you invest your money after paying taxes first.

Why should businesses offer the Roth 401(k) to their employees then? Both the Roth and regular 401(k) have a maximum contribution amount; in 2008 that number was $15,500. If employees invest the maximum amount with the regular 401(k), then after 10 years with taxes at 25%, they're left with $25,098. With a Roth, employees originally invest $11,625 since the taxes are taken out first. This allows more money to be invested up-front since employees haven't met the $15,500 maximum. To learn more about Roth 401(k) options for your business, consider the following:

1. Decide what type of Roth 401(k) to use.

2. Familiarize yourself with Roth 401(k) software.

3. Compare Roth 401(k) provider plan options.

Action Steps
The best contacts and resources to help you get it done

Find Roth 401(k) options to offer to employees

Like a regular 401(k), company matches are made to the Roth. You need to determine what type of match your company plans to make before you go ahead with this option, keeping in mind that no match is an option. A typical large company matches 50% of an employee's contributions, which is around 6% of the employee's salary.

I recommend: To stay current with laws or provide articles for your employees, check out the Roth 401(k) site. For another overview, look into Business Owner's Toolkit and its section on the Roth 401(k). A helpful chart compares the Roth 401(k) to alternate retirement options. Peruse through BuyerZone.com and its Roth 401(k) list of states and their plans.

Purchase Roth 401(k) software

You need separate accounting systems to track the Roth 401(k) and a regular 401(k). Employers purchase specific Roth 401(k) software to help employers stay on top of updates or tips of the trade. Employees benefit by the possibility to research investment options online.

I recommend: ERISA Expertise provides the Roth 401(k) Analyzer, which helps advisers or plan representatives within your office explain the basis for the plan. You can also have access to an online reference base where you can find answers to Roth 401(k) questions. Torrid Technologies sells a line of retirement-based software for professional organizations. You can download a free trial and watch an introductory video from its site.

Compare Roth 401(k) options before making a decision

Shop around for a Roth 401(k) provider plan before deciding upon what your company should offer. The size of your company matters; you don't need to offer the most-expensive option for only a few employees. However, if you have thousands of employees to consider, don't offer them the bare-bones plan.

I recommend: ShareBuilder Advisors lists several plan options for smaller businesses. View a free 401(k) demo on its site. Acting as a middleman, 401kBrokers.com offers company Roth 401(k) plans with other financial institutions such as Fidelity, Schwab, Vanguard, TD Ameritrade, T. Rowe Price and TD Waterhouse Institutional Services. Order a setup kit online.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Generally advise your employees to check their tax bracket when sorting through Roth 401(k) information. Investing in a Roth is a better idea if they think they may end up in the same or higher tax bracket; the regular 401(k) is a better option if their tax bracket may be lower.