A Roth 401(k) is retirement savings option that became available in 2006. With Roth 401(k)s, companies can add an option to their 401(k) plan that enables employees to make after-tax contributions. The contribution limit for a Roth 401(k) is the same as the contribution limit for a regular 401(k). In 2017, the limit is $18,000 plus an extra $6,000 “catch up” amount for those who will be age 50 or older by the end of the year ($24,000 total).
If an employee’s company adds the Roth option to its 401(k) retirement plan, the employee can use it regardless of the amount of his or her income. This is different from a Roth IRA which imposes limits on high-income earners. Unlike Roth IRAs, owners of Roth 401(k) accounts must take required minimum distributions similar to those for IRAs and other retirement savings plans. Distributions from the Roth 401(k) will need to be taken when the owner reaches age 70½. It is possible to roll a Roth 401(k) balance into a Roth IRA, upon termination of employment, and delay the distribution.
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