What is Roth 401(k)?

A Roth 401(k) is an employer-sponsored retirement account where you contribute after-tax dollars and withdraw tax-free in retirement. It combines features of traditional 401(k)s and Roth IRAs: contributions are made with after-tax dollars, and qualified distributions of principal and earnings are 100% tax-free. Qualifications for tax-free withdrawals require the account owner to be at least age 59½ and meet the five-year participation rule.

Roth 401(k)s share the same high contribution limits as traditional 401(k)s—$24,500 for elective deferrals in the 2026 tax year ($23,500 in 2025). The catch-up contribution limits are $8,000 in 2026 ($7,500 in 2025). Prior to 2024, designated Roth accounts in employer plans were subject to Required Minimum Distributions (RMDs) during the employee's lifetime. However, Section 325 of the SECURE 2.0 Act eliminated lifetime RMDs for designated Roth accounts starting in 2024, aligning their treatment with Roth IRAs.

Employers may match employee Roth contributions. Historically, matching contributions had to go into a pre-tax traditional account. Under SECURE 2.0, employers can now allow employees to designate matching contributions as Roth (after-tax) contributions, which are taxable to the employee in the year of contribution.