Roth 401(k): Contribution Limits, Compare Pros & Cons
A 401(k) is key to many retirement nest eggs, but many plan sponsors offer a Roth 401(k) as a second option.

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In 2025, the Roth 401(k) contribution limit is $23,500 for people under age 50, $31,000 for people 50 and older, and $34,750 for people ages 60 to 63. The Roth 401(k) contribution limits are the same as the traditional 401(k) contribution limits.
What is a Roth 401(k)?
A Roth 401(k) is a type of 401(k) account that allows you to make after-tax contributions now and then get tax-free withdrawals later in retirement. Traditional 401(k)s, on the other hand, allow you to make pretax contributions now and then wait to pay taxes on that money later when you withdraw it in retirement.
A 401(k) is key to many retirement nest eggs, but many plan sponsors offer a Roth 401(k) as a second option.
If you need help managing your 401(k), some online financial advisors will manage your account for you at your existing brokerage. And online planning services offer access to human advisors who can advise you on how to invest your 401(k).
» See our picks for the best financial advisors.
Catch-up contributions for highly paid retirement plan participants (people earning over $145,000) must be made to a Roth account beginning in 2026.
» Learn more about 401(k) contribution limits
What are the benefits and drawbacks of a Roth 401(k)?
The Roth 401(k) brings together the best of a traditional 401(k) and the much-loved Roth IRA.
Higher annual contribution limits compared to an IRA
No income limits to participate
Tax-free qualified withdrawals
Higher up-front costs
Your tax rate may not be lower in retirement
There are a few factors to consider before deciding whether a Roth 401(k) is a better option than a traditional 401(k).
Pro: A Roth 401(k) account can be more valuable in retirement
When you pull a dollar out of a Roth 401(k) account, you get to put that entire dollar in your pocket. When you pull a dollar out of a traditional 401(k), you have to pay taxes on the distribution. Another plus that comes with Roth 401(k)s? In most cases, the benefit of those tax-free qualified withdrawals extends to your beneficiaries.
Con: It may cost you more on the front end to use a Roth 401(k)
Contributions to a Roth 401(k) can hit your budget harder today because an after-tax contribution takes a bigger bite out of your paycheck than does a pretax contribution to a traditional 401(k).
» Which is best for you? Compare the Roth 401(k) vs. the traditional 401(k)
Should I invest in a Roth 401(k)?
One way to decide is to think about your current tax bracket and whether you believe your income tax rate is higher or lower now than it will be in retirement.
If your tax rate is lower now than you expect it to be in retirement
A Roth 401(k) may be helpful because you pay the taxes on your retirement income now by making your contributions with after-tax dollars. You won’t pay taxes at the future higher rate when you take qualified distributions in retirement.
Many workers, especially those early in their careers, may indeed be in a tax bracket now that is lower than the tax bracket they may be in during retirement. And due to inflation, their incomes and standards of living likely will increase over time, so they may need to draw more dollars of retirement income per year than they're earning now.
Federal and state governments may or may not increase tax rates in the future.
If your tax rate is higher now than you expect it to be in retirement
A traditional pretax 401(k) may be helpful because you make your contributions with pretax dollars now and pay taxes on your retirement income later. You pay the taxes a the future lower rate when you take qualified distributions in retirement.
If you’re closer to retirement, you may have a better idea of how your tax rate may change in those years.
Many retirees live frugally, meaning they draw relatively little retirement income, which can put them in a lower tax bracket and give them a lower tax burden.
» On track for retirement? Use this 401(k) calculator to find out
Roth 401(k) withdrawal rules
The distribution rules for a Roth 401(k) aren’t as flexible as those for a Roth IRA, but they still have benefits.
You can't withdraw contributions from a Roth 401(k) anytime you like. The Roth 401(k) has a five-year rule for distributions; you must hold the account for five years before distributions are considered qualified and can be taken tax-free.
That rule applies even if you’ve reached 59 ½, the age at which retirement distributions are typically allowed. That's something to consider if you’re getting a late start and want to access that money soon. (In that case, a Roth IRA may be a better choice.)
Roth 401(k)s are no longer subject to required minimum distributions (RMDs) as of 2024.
Can I contribute to both a 401(k) and a Roth 401(k)?
Yes, it's possible. Most employers that offer both a Roth 401(k) and a traditional 401(k) let you switch back and forth between them or even split your contributions.
Employers may even match Roth 401(k) contributions, but where the matching dollars go depends on plan rules and how the employer chose to set up the account.
Some employers may match the dollars into a pretax account, which means that even if you contribute to a Roth 401(k), you'll still have a traditional 401(k) as well. Other employers may match the dollars into the Roth account instead.
Using both accounts can enable tax diversification in retirement. You’ll be able to choose whether to pull money from a tax-free or a tax-deferred pot, or a combination of the two, each year.