401(k) FAQs

You may choose to make before-tax 401(k) contributions, after-tax Roth 401(k) contributions or a combination of both. Here are answers to some frequently asked questions about 401(k) contributions.
What is the difference between before-tax 401(k) and Roth 401(k) contributions?

The main difference is when your money is taxed. Roth 401(k) contributions are taxable as income up front, so you can withdraw money tax-free through a “qualified distribution” from the plan. Plus, any investment earnings on Roth contributions may be tax-free through a “qualified distribution.” With before-tax 401(k) contributions, your contributions, BMO Core and Matching Contributions, along with any earnings, become taxable at the time of distribution.

What’s considered a “qualified distribution” for Roth contributions?

Your Roth 401(k) account distributions will be qualified if the distribution occurs after:

  • You have attained age 59½ (or after your death or disability) and
  • You have had Roth contributions in the 401(k) Plan for at least 5 years

In applying the 5-year rule, you count from January 1 of the year your first Roth 401(k) contribution was made to the Plan. However, if you have a Roth 401(k) direct rollover from another employer’s plan, then your participation will count from January 1 of the year your first contribution was made to the other employer’s plan, if earlier.

Should I make before-tax 401(k) or Roth 401(k) contributions?

It depends on your individual circumstances. Here are some factors to consider:

  • Your current and projected income tax brackets
  • How much you can afford to save
  • The length of time until you retire
  • The timing of any anticipated withdrawals
  • The impact of switching from before-tax to after-tax savings on your tax return

It’s a good idea to review your tax return and consult with a tax advisor to determine which contribution option, or combination of options, is best for you.

How do I elect the after-tax Roth 401(k) option?
You may change your contribution elections at any time as follows:
  • Go to Workday and click Pay application, then select 401(k) under External Links, or
  • Go to Empower.
How often may I change my 401(k) contribution elections?

You may change your before-tax 401(k) and Roth 401(k) contribution elections at any time. Contribution changes will take effect within one to two payrolls after you complete your transaction. However, once a contribution is deposited to your account, it cannot be re-classified between before-tax and after-tax.

May I make Roth 401(k) catch-up contributions?

Yes. If you are eligible to make catch-up contributions (age 50 or older by the end of the calendar year), you may do so as a before-tax 401(k) deferral, an after-tax Roth 401(k) contribution or a combination of both. Before-tax catch-up and Roth catch-up contributions may not, in combination, exceed the annual catch-up limit ($7,500 during 2024).

Are my Roth 401(k) contributions eligible for BMO matching contributions?

Yes. Matching contributions are based on the amount of contributions that you make during the plan year, whether before-tax 401(k) or after-tax Roth 401(k). However, as with before-tax 401(k) deferrals, any BMO matching contributions are made on a before-tax basis and are taxable at the time of distribution.

Are Roth IRAs eligible for rollover into Roth 401(k) accounts?

No. Roth IRAs may not be rolled into Roth 401(k) accounts in any qualified employer retirement plan.