The current contribution limit for a designated Roth 401(k) account for the 2019 fiscal year is $19,000, up from $18,500 in 2018. Account-holders who are age 50 or older may make catch-up contributions of up to $6,000, for a potential total annual contribution of $25,000. Catch-up payments are additional allowed contributions that help those nearing retirement age to bulk up the account in the years before they will need the funds for regular income.
Employers can also make contributions to a Roth 401(k) by matching employee contributions up to a certain percentage or dollar amount. They can also make elective contributions that don't depend on employee contributions. In 2019 the limit on employee and employer contributions is $56,000 or 100% of employee compensation, whichever is lower. Workers who are 50 and over can add a $6,000 catch-up contribution for a total of $62,000.
- The Roth 401(k) contribution limit in 2019 is $19,000, but those age 50 or over can also make a catch-up contribution of $6,000.
- Employers can contribute to employee Roth 401(k)s through a match or elective contributions.
- Total employee and employer contributions can't exceed $56,000 or 100% of employee compensation, whichever is lower.
- Depending on your income, you may also be able to contribute to a Roth IRA, which has separate contribution limits and rules than a Roth 401(k).
- No taxes are due on your withdrawals from a Roth 401(k) in retirement, but after age 70½ you must take required minimum distributions (RMDs).
Roth 401(k) vs. Traditional 401(k)
Although the contribution limits are the same for traditional 401(k) plans and their Roth counterparts, technically a designated Roth 401(k) account is a separate account within your traditional 401(k) that allows for the contribution of after-tax dollars. The elected amount is deducted from your paycheck after income, Social Security, and other applicable taxes are assessed; the contribution doesn't garner you a tax break in the year you make it.
The big advantage of a Roth 401(k) is that no income tax is due on these funds—or their earnings—upon their withdrawal after you retire. (A traditional 401(k) works in the opposite way: Savers make their contributions on a pretax basis and pay income tax on the amounts withdrawn once they retire.) Neither of these 401(k) accounts imposes income limitations for participation.
When available, savers may use a combination of the Roth 401(k) and the traditional 401(k) to plan for retirement. Splitting your retirement contributions between both kinds of 401(k)s, if you have the option, can help you ease your tax burden in retirement.
The current contribution limit for a Roth 401(k) account for the 2019 fiscal year is $19,000; those 50 and over can also make a $6,000 catch-up contribution.
If You Have Multiple Roth Accounts
Roth IRA accounts have a separate annual contribution limit of $6,000 for 2019 (up from $5,500 in 2018), with an additional $1,000 limit for catch-up contributions if you are age 50 or over (for a total of $7,000). The question for those who also want to have a Roth IRA: Do you meet the income limits for being permitted to have one? As of 2019, the income phase-out for Roth IRA contributions starts at $122,000 for single filers (up from $120,000 in 2018) and eligibility ends at $137,000 (up from $135,000).
For those who are married filing jointly (and qualifying widow(er)s) in 2019, that income threshold starts at $193,000 (up from $189,000) and ends at $203,000 (up from $199,000). Thus, if you have both a Roth 401(k) plan and a Roth IRA, your total annual contribution for all accounts has a combined limit of $25,000 ($19,000 Roth 401(k) contribution + $6,000 Roth IRA contribution) or $32,000 if you are 50 or older ($19,000 Roth 401(k) contribution + $6,000 catch-up contribution + $6,000 Roth IRA contribution + $1,000 catch-up contribution).
Roth 401(k) contributions must be made by the end of the calendar year (the 2019 contribution deadline is Dec. 31, 2019). You have a bit more time with Roth IRA contributions; you must make them by tax day, April 15, 2020, to count for 2019.
Five years must pass from your first contribution before you can withdraw from your Roth 401(k) tax free, and you must also be 59½ years old. At 70½, you are required to take minimum distributions from your Roth 401(k), but not from a Roth IRA.