Direct Answer
A Roth 401(k) is a designated Roth account within an employer-sponsored plan under IRC Section 402A. Contributions are made after-tax, with the same $24,500 limit as Traditional 401(k) (shared). There are no income limits, no RMDs during the owner's lifetime (SECURE 2.0), and qualified distributions are completely tax-free.
Roth 401(k) Profile: 2026 Limits, Tax Rules and Differences from Roth IRA
2026 Contribution Limits
| Category | 2026 Limit |
|---|---|
| Employee elective deferral (combined pre-tax + Roth) | $24,500 |
| Age 50+ catch-up (standard) | $8,000 additional (total $32,500) |
| Ages 60-63 higher catch-up (SECURE 2.0) | $11,250 additional (total $35,750) |
| Total annual additions limit (§415) | $72,000 |
The $24,500 limit is shared between pre-tax and Roth designations. For example, if you contribute $15,000 to the Roth 401(k), only $9,500 remains for pre-tax. Employer contributions count toward §415 but are always pre-tax. Source: IRS Rev. Proc. 2024-40.
Tax Treatment
- Contributions: Made with after-tax dollars. No current-year federal income tax deduction.
- Growth: Tax-free while inside the plan.
- Qualified distributions: Completely tax-free. A distribution from a Roth 401(k) is qualified if (1) the 5-year holding period has been satisfied for the designated Roth account and (2) the distribution occurs after age 59½, on account of disability, or to a beneficiary after death.
- Non-qualified distributions: Subject to ordinary income tax and a 10% additional tax on the earnings portion. Basis (contributions) is always returned tax-free and penalty-free.
The 5-year rule for Roth 401(k)s is separate from the Roth IRA 5-year clock. Each Roth 401(k) account has its own clock, running from the first year of Roth contribution to that plan. Rolling a Roth 401(k) to a Roth IRA transfers the Roth IRA clock (not the Roth 401(k) clock) to control future distributions.
Roth 401(k) vs. Roth IRA: Key Differences
| Feature | Roth 401(k) | Roth IRA |
|---|---|---|
| 2026 contribution limit | $24,500 (shared) | $7,500 |
| Income limits | None | Single: phase out $153,000-$168,000; MFJ: $242,000-$252,000 |
| RMDs (owner's lifetime) | None (SECURE 2.0) | None |
| Employer contributions | Yes (pre-tax) | No |
| Participant loans | Yes (plan permitting) | No |
| Investment choices | Limited to plan options | Any (self-directed) |
RMDs Under SECURE 2.0
Starting in 2024, SECURE 2.0 eliminated RMDs for designated Roth accounts in employer plans. Before this change, Roth 401(k) accounts required RMDs beginning at the same age as Traditional 401(k)s (then age 73), unlike Roth IRAs which have never required lifetime RMDs.
The practical implication: rolling a Roth 401(k) to a Roth IRA is no longer required to avoid RMDs. However, rolling over can still be beneficial for investment flexibility, consolidation, or estate planning reasons (Roth IRA beneficiaries still must take distributions, with different rules from Roth 401(k) beneficiaries).
Frequently Asked Questions
- What is the Roth 401(k) contribution limit for 2026?
- The 2026 Roth 401(k) contribution limit is the same as the Traditional 401(k) limit: $24,500 in employee elective deferrals (shared between pre-tax and Roth designations). Age 50+ catch-up is $8,000 (total $32,500); ages 60-63 higher catch-up is $11,250 (total $35,750). Source: IRS Rev. Proc. 2024-40.
- Does a Roth 401(k) have income limits like a Roth IRA?
- No. Unlike a Roth IRA, a Roth 401(k) has no income limit for contributions. Any employee of a sponsoring employer that offers the Roth feature may elect Roth contributions regardless of their MAGI. This allows high-income earners who are phased out of direct Roth IRA contributions to make Roth retirement contributions. Source: IRC Section 402A.
- Do Roth 401(k) accounts have required minimum distributions?
- Under SECURE 2.0 (effective 2024), Roth 401(k) accounts are no longer subject to required minimum distributions during the account owner's lifetime. Prior to SECURE 2.0, Roth 401(k)s were subject to RMDs unlike Roth IRAs. Now they match Roth IRA treatment: no RMDs required during the owner's lifetime. Source: SECURE 2.0 Act of 2022, Section 325.