January 1st is coming quick, and this year it brings with it a new retirement savings vehicle to consider. Joining the 401k, IRA, and Roth IRA is the Roth 401k. If you're familiar with the difference between an IRA and a Roth IRA you can probably guess that a Roth 401k is just like a 401k except it is funded with after-tax money. That's the easy part of the Roth 401k; the harder part is deciding whether or not to use it.

Like the 401k, the Roth 401k will be offered by employers who wish to help their employees save for retirement. However, in a recent survey by Hewitt Associates only 35% of responding employers indicated they are likely to do so. If your employer matches a percentage of your 401k contributions it may continue to do so with pre-tax dollars into your Roth 401k. Now don't go looking for a loophole here, the pre-tax dollars from your employer will be kept in a separate account and will be taxed as ordinary income when you withdraw the funds. If you leave your job you will be able to rollover your Roth 401k into a Roth IRA.

It appears that the Roth 401k will be most helpful to high-income earners who exceed the income requirements for Roth IRA's ($95k - $110k for single filers and $150k - $160k for married filing jointly). Like the 401k, the Roth 401k has no income requirements. "Excellent," you may think. "Now I can save even more money for retirement." Not so fast. As always, there are restrictions to how much you can save.

Like the traditional 401k, the Roth 401k allows contributions of $15k/year ($20k/year for those 50 and older). This is much higher than the $4k/year ($5k/year for 50 and older) for the IRA and Roth IRA. There's a hitch, though. You can't contribute the maximum amount to each of your 401k and your Roth 401k like you can your IRA and Roth IRA. The $15k(20k)/year limit applies to the total amount contributed to both types of 401k. So if you're currently maxing out your 401k contributions (good for you) you'll have to reduce your 401k contribution if you want to contribute to the Roth 401k. That's where things get dicey. Now you have to decide what your taxes will be like when you retire. If you think your tax percentage will be lower when you retire, then put your money in your pre-tax 401k. If you think taxes will be through the roof when you retire, then you should probably put your money in the after-tax Roth 401k. As always, a blended approach is probably best.

The Roth 401k is currently only temporary. Unless made permanent the Roth 401k will expire in 2010. Experts say that it is most likely that your assets in the Roth 401k will remain in the account, but no further contributions will be allowed. Check back here in 2009 to see what happens.

Thsi post has been contributed by Creative Reporter Dave.