COLUMBUS, Ohio—Jack Towarnicky, associate vp of benefits planning at Nationwide Mutual Insurance Co., keeps close tabs on changes in federal legislation, the tax code and Labor Department rules governing employee benefit plans so he is able to quickly update the company' s benefit programs.

For example, Nationwide added a Roth feature to its 401(k) plan on Jan. 1, 2006—the first day that employers could do so under the Economic Growth and Tax Relief Reconciliation Act of 2001.

Unlike traditional 401(k) contributions that are made with pretax dollars, Roth 401(k) contributions are made with aftertax dollars and the contributions and investment earnings can be withdrawn tax-free. Investment earnings, though, cannot be withdrawn tax-free until five years after an employee began to make contributions and after he or she reaches age 59‡.

By law, the funds held in the Roth accounts are segregated from those in traditional 401(k) accounts. Employees' combined contributions to both accounts cannot exceed the Internal Revenue Service limits of $15,500 a year for individuals 50 or younger or $20,500 for those older than 50.

As a result of adding the Roth feature, "we have a few source buckets in the plan," Mr. Towarnicky said. "We have pretax contributions, we have company-matching contributions, we have aftertax employee contributions and we have Roth 401(k) contributions."