Answers - Finance

There has been a lot of buzz surrounding the new Roth option on 401k’s. Obviously, there are a lot of sound reasons why it is a good idea to add a Roth option to a 401k – otherwise our law makers

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

wouldn’t have passed this piece of legislation.

However, there is a one, very compelling reason to not add a Roth option to your 401k. The simple, singular reason for not doing it is that it fu

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

rther confuses participants which leads to lower participation. Countless studies have shown conclusive evidence that a confused consumer is less likely to buy.

Hewitt Associates, Harvard Univer

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

sity and the University of Pennsylvania completed a joint study to determine why people don’t participate in their 401k plans. Here are the top five reasons:

They are paying down thei

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

r debt first.

They do not plan on staying with the company very long.

They are simply procrastinating.

They are confused by the process.

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

They don’t trust the market due to government corruption and corporate scandals.

Of that list, there is only one issue that can be addressed by how the 401k plan is designed, w

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

hich is to limit confusion by making the plan simple. Adding a Roth option to your 401k plan is more likely to confuse participants leading to lower participation than.

Reasons t

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

o Add a Roth option to your 401(k)

Obviously, there are reasons to add a Roth option to your 401(k). Here are a few compelling reasons for doing so:

Several pe

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ople in your company are maxing out their 401(k) contribution. Since the total dollar amount that can be contributed by a participant is the same for a Roth or Traditional 401k, a Roth o

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ption effectively allows for a larger contribution since it is after-tax money rather than pre-tax. If a significant portion of your people would contribute the maximum allowed into their Roth 4

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

1(k) accounts, it would be worthwhile to add this option to your plan.

Several people in your organization have very large balances in traditional 401k or IRA account.

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

The biggest advantage of Roth IRA’s and 401(k)’s is that they allow you to better manage your taxes in retirement. If you have employees that have a lot of money in pre-tax qualified plans, it

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

may be a nice benefit to save some money in an after-tax qualified plan. (It’s important to note that all company contributions for the benefit of the employee will still be classified as pre-tax

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

traditional 401k contributions.)

You have a young work staff who fit the following two criteria: 1. They are actually contributing to their 401k plans. 2. Their future earning

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

s potential is significantly higher than their current earnings. As was stated above, savings in a Roth IRA or 401k allows you to manage your taxes in retirement. If your income is less

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

now that you think it might be in retirement, then assuming that tax rates stay consistent (not likely!), you’d be better off contributing to a Roth versus a Traditional 401k.

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

Conclusion

Obviously there are advantages to having a Roth option on your 401k. Our nation’s lawmakers typically don’t pass new legislation without some sort of justifi

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

able reason. (Although it could be argued that the entie Roth concept was designed soley to increase current tax revenue.)

However, the truth about 401k participation is that many people don’t p

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

articipate because they simply are confused. Adding additional choices such as an excess number of funds or Roth options only serves to confuse participants more. The bottom line is that a Roth

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

option should not be added to a 401k plan “just for the sake of it”. Carefully consider if there is a compelling reason such as one of the aforementioned justifications for adding it to your plan

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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If you are working in a traditional repeat-business company, you probably have a field based sales team. If so, the team are probably calling on the same customers on a monthly (maybe more frequent) basis. Because your sales team is well trained and enthusiastic, as well as servicing their existing customer base, they will be trying to follow-up new leads and find new customers by networking with other sales people, searching directories and asking existing customers who their main competitors are. So should they also bear the burden of price negotiation?

Ethical SEO practice will enable you to attract more and more visitors to your site. In fact, this will give you efficient and reliable results. Though it takes time to get results, the profitable results are assured.

It is the most secured way to get out of your uncontrollable debt burden. Credit card debt consolidation program consolidate all your pending credit card dues into one solitary loan and provide you with reasonable monthly imbursement.

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Answers - The Downside to Roth 401(k) Plans

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