From: kastnna 
Newsgroups: misc.invest.financial-plan
Subject: Roth 401k and a possible dead horse.
Date: Tue, 14 Aug 2007 22:16:31 -0500
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I was reviewing IRS pub 4530 regarding the new Roth amendment that
smart employers are starting to add to their 401k plan.

If I am reading the publication correctly, the Roth 401k distribution
rules are markedly different from the Roth IRA. As we've hashed out
many times, and in Fairmark's own words,

"The first dollars that come out of your Roth IRA - any Roth IRA you
own - will be treated as a return of your non-rollover contributions.
That's good, because your non-rollover contributions come out free
from any tax or penalty."

But publication 4530 states that Roth distributions from a 401k come
out in proportion to the overall Roth 401k balance.

To use the IRS example, $9400 in Roth contributions have been made to
a Roth 401k. There are $600 in earnings. If a $5000 non-qualified
distribution is made, $4700 of that is return of contributions and
$300 are earning (subject to tax and penalty).

Am I understanding this properly?

One other question:
1. Can one contribute to a Roth IRA (subject to income imitations,
etc) if they are contributing to a Roth 401k?

TIA