A right which is offered by employers, in the US, to employees such that they can contribute after-tax funds to retirement plans that are funded with pre-tax money. Though Roth individual retirement accounts were introduced in 1998, the Roth option was permitted by the Internal Revenue Service, on 401k and 403b plans and individual retirement accounts in 2006. Roth accounts allow retirees, who expect paying a higher income tax rate in retirement than what they currently pay, to redeem their money tax-free at retirement. In that sense, Roth accounts, unlike traditional accounts, don’t give retirees a tax deduction for contributions. Furthermore, these accounts are not mandatory, i.e., they can be offered at the discretion of employers as and when they deem appropriate.
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