Couple taking selfie by mountain

Roth 401(k) Contributions/Distributions

Participants have the option of designating some or all of their salary deferral as a Roth contribution to their 401(k) and 403(b) plans.


  • Plan sponsors must elect to include the Roth 401(k) feature in their 401(k) plan document.
  • Employers must ensure their payroll systems allow for after-tax contributions.


  • Unlike Roth IRAs, employees at any income level can make designated Roth 401(k) contributions.


  • Roth contributions are made on an after-tax basis.
  • Combined traditional (pre-tax) and Roth 401(k) (post-tax) contributions cannot exceed the maximum deferral limit ($20,500 for 2022 or $27,000 for those age 50 or older).
  • Roth contributions will be subject to 401(k) discrimination testing.
  • Employer contributions, such as matching and profit sharing contributions, will continue to be pre-tax and subject to taxation when distributed.


  • Qualified distributions from a designated Roth account are completely non-taxable to the participant if:
    • The participant incurs a qualifying event (attainment of age 59½, death, or disability) and
    • At least five years have passed from the date of the first Roth contribution
  • Roth contributions will be eligible for rollover into a Roth IRA at retirement or separation of service.


  • Investors who are not able to make Roth IRA contributions due to the adjusted gross income (AGI) limits ($153,000 for single filers and $228,000 for joint filers for 2023).
  • Younger workers who expect to retire in a higher tax bracket.
  • Investors who want to provide a tax-free inheritance to their heirs.

Stifel does not provide tax advice. You should consult with your professional tax advisor regarding your particular situation.