Roth 401(k)


DEFINITION of 'Roth 401(k)'

An employer-sponsored investment savings account that is funded with after-tax money. After the investor reaches age 59.5, withdrawals of any money from the account (including investment gains) are tax-free. Unlike the Roth IRA, the Roth 401(k) has no income limitations for those investors who want to participate - anyone, no matter what his or her income, is allowed to invest up to the contribution limit into the plan.


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BREAKING DOWN 'Roth 401(k)'

This type of investment account is well-suited to people who think they will be in a higher tax bracket in retirement than they are now. The traditional 401(k) plan is funded with pretax money, which increases the amount invested in the account; however, all withdrawals are taxed. As for the Roth IRA, which is also an after-tax program, it restricts investors with high income from participating, but the Roth 401(k) has no such restriction.

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  1. What happens to my Roth 401(k) if I leave my job?

    A Roth 401(k) works like a traditional 401(k) plan, in that contributions are made through paycheck deferrals and assets ... Read Full Answer >>
  2. How much can I contribute to my Roth 401(k)?

    The maximum amount that a person can contribute to his Roth 401(k) for the calendar year 2015 is $18,000, or $24,000 for ... Read Full Answer >>
  3. Will I make more money in a Roth 401(k) or a traditional 401(k)?

    When looking at which type of 401(k) makes more money, a Roth 401(k) or a traditional 401(k), it depends on the period of ... Read Full Answer >>
  4. Are Roth 401(k) plans matched by employers?

    Roth 401(k) plans are typically matched by employers at the same rate as they match traditional 401(k) plans. Some employers ... Read Full Answer >>
  5. Can savings from a Roth 401(k) be used for college without penalty?

    With college tuition ever on the rise, many parents look to their retirement savings to assist with university fees. However, ... Read Full Answer >>
  6. What are the Roth 401(k) contribution limits?

    The current contribution limit for a designated Roth 401(k) account for the 2014 fiscal year is $17,500. In addition, account ... Read Full Answer >>
  7. What are the contribution limits of a 401(k) vs. a Roth 401(k)?

    According to U.S. News & World Report, the contribution limits for the 2014 tax year for a 401(k) and a Roth 401(k) are ... Read Full Answer >>
  8. What are the main differences between a Roth 401(k) and a 401(k)?

    Many investors have questions about the investment options of a Roth 401(k) vs 401(k). A Roth 401(k) and a traditional 4 ... Read Full Answer >>
  9. What are the Roth 401(k) withdrawal rules?

    To make a "qualified" withdrawal from a Roth 401(k) account, the account holder must have been contributing to the account ... Read Full Answer >>

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