Can a governmental 457(b) plan allow designated Roth accounts?

A governmental 457(b) plan may indeed be amended to allow designated Roth accounts. This flexibility means that plans can incorporate designated Roth contributions, thereby permitting employees to contribute to a Roth-style account within the framework of the 457(b) plan.

The introduction of Roth accounts allows participants to contribute after-tax dollars, which then grow tax-free, and qualified distributions are also tax-free. This feature can enhance the retirement savings strategy for employees, offering them more options in how they save and later withdraw their retirement funds.

It's also notable that the ability to amend the plan to include designated Roth accounts aligns with regulatory allowances provided by the IRS, which encourages governmental employers to adapt their retirement plans in ways that can provide greater benefits to employees.