|
Issue |
Designated Roth 401(k) |
Roth IRA |
Pre-tax 401(k) |
|---|---|---|---|
|
Contributions |
Designated Roth employee elective contributions are made with after-tax dollars. | Roth IRA contributions are made with after-tax dollars. | Traditional, pre-tax employee elective contributions are made with before-tax dollars. |
|
Income limits |
No income limitation to participate. |
Income limits:
|
No income limitation to participate. |
|
Maximum elective contribution |
Aggregate* employee elective contributions limited to $23,000 in 2024; $22,500 in 2023; $20,500 in 2022; $19,500 in 2021 (plus an additional $6,500 in 2022 and 2021 for employees age 50 or over; additional $7,500 in 2023 and 2024 for employees age 50 or over). | Contribution limited to $7,000 plus an additional $1,000 for employees age 50 or older in 2024; $6,500 plus an additional $1,000 for employees age 50 or older in 2023; $6,000 plus an additional $1,000 for employees age 50 or over in 2021 and 2022. | Same aggregate* limit as designated Roth 401(k) account |
|
Taxation of withdrawals |
Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:
|
Same as designated Roth 401(k) account and can have a qualified distribution for a first-time home purchase. | Withdrawals of contributions and earnings are subject to federal and most state income taxes. |
|
Required distributions |
Distributions must begin no later than age 72 (age 70 ½ if reached age 70 ½ before January 1, 2020), unless still working and not a 5% owner. | No requirement to start taking distributions while owner is alive. | Same as designated Roth |
* This limitation is by individual, rather than by plan. You can split your annual elective deferrals between designated Roth contributions and traditional pre-tax contributions, but your combined contributions can’t exceed the deferral limit - $23,000 in 2024; $22,500 in 2023; $20,500 in 2022; $19,500 in 2021 ($30,500 in 2024; $30,000 in 2023; $27,000 in 2022; $26,000 in 2021 if you're eligible for catch-up contributions).