When you make Roth 401(k) contributions, you get the potential for federal income tax-free withdrawals when you retire.
Here's how they work: You pay taxes on your contributions now. Then — if you take a "qualified distribution" later — you'll pay no federal income taxes on the money you take out of your Roth account.
Interested? Subject to the new Roth catch-up rule for high-wage earners? Browse the FAQs, compare the contribution options and review some case studies.
You can always change how you're contributing on Benefits OnLine®
Go now »
Roth 401(k) contributions are taken from your paycheck after taxes are withheld. So you pay taxes now. Then, if you take a "qualified distribution," your Roth 401(k) contributions and any related investment earnings can generally be withdrawn federal income tax-free. (State income taxes vary; a tax professional can advise how your state treats Roth 401(k) distributions.)
A qualified distribution is a withdrawal that meets two requirements:
- At least five years have passed since the first day of the year of your first Roth 401(k) contribution (or in-plan balance conversion, if earlier), and
- You must be at least age
59½, or have become disabled or deceased.
In this case, you'll owe ordinary income taxes on your investment earnings. A 10% additional federal tax may also apply if you take a distribution before age
No. Unlike Roth IRAs, there are no income limits on who can make Roth 401(k) contributions. You can also contribute more to a Roth 401(k) than to a Roth IRA.
Roth contributions, along with pre-tax and after-tax (if available in your plan) contributions, are subject to limits set by your employer and tax laws. The current tax law limits are available at go.ml.com/401klimits.
Yes. If you do, your total contributions (plus any after-tax contributions, if available in your plan) are subject to your plan's limits and the tax law limits. Tax law limits are available at go.ml.com/401klimits.
While both types of contributions are made on an after-tax basis:
- Investment earnings on traditional after-tax contributions (if available in your employer's plan) are always taxable at withdrawal. Investment earnings on Roth 401(k) contributions are federal income tax-free if taken as a qualified distribution.
- Traditional after-tax contributions are subject to a higher annual tax law limit than pre-tax and/or Roth 401(k) contribution. So they allow you to contribute more to your 401(k) account.
- Roth 401(k) balances are not subject to Required Minimum Distributions (RMDs) during the lifetime of the original account holder; you can keep your Roth balance throughout your lifetime and not have to take a withdrawal.
Yes, you can choose to make catch-up contributions on a pre-tax and/or Roth 401(k) basis. However, if your prior year income from your employer exceeds a certain limit you'll be required to make any catch-up contributions on a Roth 401(k) basis. (See Roth catch-up rule FAQs.)
One key factor is your likely tax rate when you take your distributions. Assuming all other factors would be the same, generally speaking:
- If you think your tax rate will be lower, you may benefit from paying taxes later with pre-tax contributions.
- If you think your tax rate will be higher, you may benefit from paying taxes now at a lower tax rate with Roth 401(k) contributions.
- If you think your tax rate will be the same as it is now, pre-tax or Roth 401(k) contributions generally yield the same, after taxes.
In addition, there are no income limits on who can make Roth 401(k) contributions as there are with Roth IRA contributions and you won't need to take Required Minimum Distributions (RMDs) from a Roth 401(k) account during your lifetime. You should consult a tax advisor to review your personal situation.
Yes. Benefits OnLine® offers the Roth 401(k) Comparison Calculator. To access the calculator select "Change My Contribution Rate" from the Action items to the right of the plan name on the Home page and you'll see a link to the calculator in the Roth contribution section of the screen. You'll also see a link to other resources that can help you with your decision.
Your employer determines which type(s) of contributions, if any, to match. Please see your Summary Plan Description for details.
Keep in mind any company contributions and related earnings you may be vested in will be taxable unless your plan offers company matching contributions as Roth and you have elected this feature.
Yes, but only if offered in your plan and if the functionality is available. You can elect to have your employer matching contributions be made as Roth 401(k) contributions, which means that taxes on your contributions and your employer's contributions will be deducted before those contributions go into your account.
Typically, an employer will match Roth and/or pre-tax contributions. Please see your Summary Plan Description for details on what type(s) of contributions, if any, your employer matches. Consider choosing a total contribution rate that allows you to receive the full company match.
Yes, you can stop your Roth 401(k) contributions at any time. You cannot convert Roth 401(k) balances to pre-tax (or after-tax).
If you're required to make catch-up contributions on a Roth 401(k) basis, you cannot convert to making pre-tax catch-up contributions unless you no longer meet the high-wage earner criteria. (See Roth catch-up rule FAQs.)
Yes, if your employer's plan allows in-plan Roth conversions. If you convert pre-tax assets to Roth 401(k) assets, you'll owe income taxes on your contributions and any earnings on those contributions. If you convert after-tax assets to Roth 401(k) assets, you'll owe income taxes on any earnings from your after-tax contributions. Once you convert to Roth, future contributions and earnings will be federal income tax-free if taken as a qualified distribution.
If you complete an in-plan Roth conversion prior to reaching age 59½, a special "recapture" rule applies to the converted assets that were derived from pre-tax assets, and you may owe an additional 10% federal tax if you take a distribution of the converted assets before five years have passed from the first day of the year in which the conversion occurred. A separate five-year holding period applies to each in-plan Roth conversion of pre-tax assets you complete before reaching age
No, you cannot roll over a Roth Rollover IRA into your current employer-sponsored retirement plan. Some plans may let you roll over traditional Rollover IRAs or traditional IRAs. Note, however, that not all plans accept rollovers of traditional Rollover IRAs or traditional IRAs. It is important to understand the rules prior to requesting a rollover.
You can roll over your entire balance or a portion of your balance from a 403(b), 457 or a 401(k), provided your current plan accepts rollovers. If you are rolling over a Roth balance, the year of your first Roth contribution in your prior plan will be used to establish the start date of any future Roth contributions you may make in your current plan, including catch-up contributions made as Roth. You cannot transfer a Roth IRA into your 401(k).
Yes, if your employer's plan allows loans and/or withdrawals, you can take a loan or withdrawal from your Roth 401(k) account balance.
RMDs are no longer required from Roth 401(k) account balances during the lifetime of the account owner. RMDs will be required from pre-tax and/or traditional after-tax accounts.
Under the SECURE 2.0 Act, participants whose prior year FICA earnings from their current employer were above a certain limit (for 2026, earnings above $150,000 in 2025) are required to make any catch-up contributions on a Roth 401(k) basis. This rule is effective starting January 1, 2026.
While you may see different terms, the rule is what's important. Anyone age 50 or older and eligible for catch-up contributions with prior year FICA wages from their current employer (and potentially, their employer's affiliates) greater than the defined limit (for 2026, earnings of $150,000 in 2025) will need to make any catch-up contributions on a Roth 401(k) basis.
FICA (Federal Insurance Contributions Act) wages are your earnings (including salary, bonuses, commissions and taxable fringe benefits) subject to U.S. payroll taxes and shown in Box 3 on your W2. You'll receive a notice each year indicating whether you are subject to the Roth catch-up rule or not.
You're generally eligible to make catch-up contributions, if available in your employer's plan, starting in the year you turn age 50.
Roth 401(k) contributions are taken from your paycheck after taxes are withheld. So you pay taxes now. Then, if you take a "qualified distribution," your Roth 401(k) contributions and any related earnings can generally be withdrawn federal income-tax free. (State income taxes vary; a tax professional can advise how your state treats Roth 401(k) distributions.)
A qualified distribution is one that meets two requirements:
- At least five years have passed since the first day of the year of your first Roth 401(k) contribution (or in-plan balance conversion, if earlier) and
- You must be least 59½, or have become disabled or deceased.
If you take a non-qualified distribution, you'll owe ordinary income taxes on your investment earnings. A 10% additional federal tax may also apply if you take a distribution before age 59½, unless an exception applies.
The rule is that five (5) years must have passed from the beginning of the year (not the day) of your first Roth 401(k) contribution for you to be eligible to take your withdrawals free of federal income taxes. This means, for example, that if you begin Roth 401(k) contributions on December 15, 2025, you'll meet the five-year requirement on January 1, 2030, not January 1, 2031.
Please note that other rules apply to tax-free Roth 401(k) withdrawals.
Roth 401(k) contributions to a prior plan will be considered for purposes of the five-year rule for Roth 401(k) contributions you make to your current plan only if you roll over your Roth account balance from the prior plan to your current plan. Make sure you provide documentation to your current plan showing the year of your first Roth 401(k) contribution.
If your FICA earnings from your current employer (and potentially, your employer's affiliates) were more than $150,000 in 2025, you'll be required to make any catch-up contributions on a Roth 401(k) basis. If your FICA earnings were equal to or less than $150,000 in 2025, you can make catch-up contributions on a pre-tax and/or Roth 401(k) basis.
Yes. If you're eligible to make catch-up contributions you'll receive an annual notification if you're subject to this new rule and what steps, if any, you may need to take.
If your FICA income exceeds the defined limit in some years but not in others, you'll be able to make pre-tax catch-up contributions during the calendar year following any year during which your income from your current employer (and potentially, your employer's affiliates) does not exceed the limit.
You will not be able to make pre-tax catch-up contributions during the calendar year following any year during which your income from your current employer (and potentially, your employer's affiliates) exceeds the defined limit.
The FICA earnings limit applies only to prior year FICA earnings from your current employer (and potentially, your current employer's affiliates). If your total FICA earnings for the prior year exceeded the defined limit, but your prior year FICA earnings from your current employer (and potentially, your current employer's affiliates) did not exceed the defined limit, you would not be subject to the new Roth catch-up rule.
The annual notification you receive if you're subject to the new rule will explain the steps, if any, your employer will require.
Your contributions may be defaulted to Roth 401(k) catch-up contributions:
- Once your pre-tax and/or Roth contributions reach the annual tax law limit for regular contributions, any further contributions will be "deemed" to be an election to make Roth 401(k) catch-up contributions. You can always adjust your contribution rate if you don't want to make catch-up contributions.
You may have to elect Roth 401(k) catch-up contributions:
- Once your pre-tax contributions reach the annual tax law limit for regular contributions, your contributions will end. If you want to make Roth 401(k) catch-up contributions, you'll need to make an active election to do so.
If your plan does not offer Roth contributions, you will only be permitted to make pre-tax catch-up contributions if your prior year income from your current employer (and potentially, your current employer's affiliates) did not exceed the limit. Starting January 1, 2026, plans must have implemented the Roth feature to allow participants whose FICA income in the prior year exceeded the limit to make Roth catch-up contributions. It may be that your employer is still considering how the plan will be designed to comply with the Roth catch-up rule.
No. Any existing pre-tax catch-up amounts are not affected by the new rule. You do not need to take any action.
Yes. The defined FICA earnings limit (for 2026, earnings of $150,000 in 2025) will be indexed annually for inflation.
This is called "positive" consent. While you may not be making catch-up contributions today, providing your consent (or declining it) now means your contributions will follow your direction should you start making catch-up contributions in the future. You can provide your consent (make your election) on Benefits OnLine.
Correct, this is called "negative" consent. If you do not want to make catch-up contributions on a Roth 401(k) basis, you'll need to make that election on Benefits OnLine or lower your contribution rate so that your contributions do not exceed the annual tax law limit for regular contributions.
The terms of your employer's 401(k) plan determine whether catch-up contributions are matched or not.
Yes. Because Roth 401(k) contributions are deducted from your paycheck after taxes are deducted, your take-home pay will be reduced by the amount of your Roth 401(k) contributions.
No. RMDs are no longer required from Roth 401(k) account balances during the lifetime of the account owner. (RMDs are required from pre-tax and/or traditional after-tax accounts.)
What's the difference between my contribution options?
See how your contribution options work.
Pre-tax contributions
How they work
- Contributions come out of your paycheck before federal income taxes are withheld. So you pay taxes later.*
- Contributions and investment earnings on those contributions have the potential to grow tax-deferred.
- Your withdrawals or distributions will be taxed as ordinary income.
- You'll generally need to take Required Minimum Distributions (RMDs) from pre-tax amounts once you hit a certain age if you have separated from service.**
- Withdrawals may be rolled over to a traditional IRA, converted to a Roth IRA or rolled over to another 401(k) plan that accepts rollovers.
What to consider
- If you think your tax rate in retirement may be lower, you could potentially benefit by deferring taxes with pre-tax contributions.
- You'll need to take Required Minimum Distributions (RMDs).
Roth 401(k) contributions
How they work
- Contributions come out of your paycheck after taxes are withheld. So you pay taxes now.
- Contributions and investment earnings on those contributions have the potential to grow federal income tax-free.
- Your withdrawals or distributions will generally be free of federal income taxes if taken as qualified distributions.***
- You no longer need to take Required Minimum Distributions (RMDs) from your Roth 401(k) account during your lifetime.
- Withdrawals may be rolled over to a Roth IRA or a Roth account in a 401(k) plan or other eligible plan that accepts rollovers.
What to consider
- If you think your tax rate in retirement may be higher, you may potentially benefit from paying taxes now at a lower rate with Roth 401(k) contributions.
- You're not required to take Required Minimum Distributions (RMDs) in your lifetime.
*Federal income taxes on pre-tax contributions and any associated earnings are due upon withdrawal. You may also be subject to a 10% additional federal tax if you take a withdrawal before age 59½, unless an exception applies.
**If you're still working for the company as of the applicable age, you can generally delay RMDs until you retire. However, if you own more than 5% of the company, you may not delay commencement of RMDs beyond the applicable age regardless of your employment status with the company.
***Qualified distributions: Any earnings on Roth 401(k) contributions can generally be withdrawn federal income tax-free if you meet the two requirements for a "qualified distribution": 1) At least five years must have elapsed from the first day of the year of your initial contribution or conversion, if earlier, and 2) you must have reached age 59½ or become disabled or deceased. If you take a non-qualified withdrawal of your Roth 401(k) contributions, any Roth 401(k) investment returns are subject to regular income taxes, plus a possible 10% additional federal tax if withdrawn before age 59½, unless an exception applies. State income tax laws vary; consult a tax professional to determine how your state treats Roth 401(k) distributions.
Pre-tax contributions
How they work
- Contributions come out of your paycheck before federal income taxes are withheld. So you pay taxes later.*
- Contributions and investment earnings on those contributions have the potential to grow tax-deferred.
- Your withdrawals or distributions will be taxed as ordinary income.
- You'll generally need to take Required Minimum Distributions (RMDs) from pre-tax amounts once you hit a certain age if you have separated from service.**
- Withdrawals may be rolled over to a traditional IRA, converted to a Roth IRA or rolled over to another 401(k) plan that accepts rollovers.
What to consider
- If you think your tax rate in retirement may be lower, you could potentially benefit by deferring taxes with pre-tax contributions.
- You'll need to take Required Minimum Distributions (RMDs).
Roth 401(k) contributions
How they work
- Contributions come out of your paycheck after taxes are withheld. So you pay taxes now.
- Contributions and investment earnings on those contributions have the potential to grow federal income tax-free.
- Your withdrawals or distributions will generally be free of federal income taxes if taken as qualified distribution.***
- You no longer need to take Required Minimum Distributions (RMDs) from your Roth 401(k) account during your lifetime.
- Withdrawals may be rolled over to a Roth IRA or a Roth account in a 401(k) plan or other eligible plan that accepts rollovers.
What to consider
- If you think your tax rate in retirement may be higher, you may potentially benefit from paying taxes now at a lower rate with Roth 401(k) contributions.
- You're not required to take Required Minimum Distributions (RMDs) in your lifetime.
Traditional after-tax contributions
How they work
- Contributions come out of your paycheck after taxes are withheld. So you pay taxes now.
- Investment earnings have the potential to grow tax-deferred and are taxed as ordinary income upon withdrawal or distribution.****
- You'll generally need to take Required Minimum Distributions (RMDs) once you hit a certain age if you have separated from service.**
- Withdrawals may be rolled over to a traditional IRA, converted to a Roth IRA or rolled over to another 401(k) plan that accepts rollovers.
What to consider
- If your pre-tax and/or Roth 401(k) contributions reach the tax-law limit, traditional after-tax contributions let you contribute more to your employer's plan, subject to overall limits.
*Federal income taxes on pre-tax contributions and any associated earnings are due upon withdrawal. You may also be subject to a 10% additional federal tax if you take a withdrawal before age 59½, unless an exception applies.
**If you're still working for the company as of the applicable age, you can generally delay RMDs until you retire. However, if you own more than 5% of the company, you may not delay commencement of RMDs beyond the applicable age regardless of your employment status with the company.
***Qualified distributions: Any earnings on Roth 401(k) contributions can generally be withdrawn federal income tax-free if you meet the two requirements for a "qualified distribution": 1) At least five years must have elapsed from the first day of the year of your initial contribution or conversion, if earlier, and 2) you must have reached age 59½ or become disabled or deceased. If you take a non-qualified withdrawal of your Roth 401(k) contributions, any Roth 401(k) investment returns are subject to regular income taxes, plus a possible 10% additional federal tax if withdrawn before age 59½, unless an exception applies. State income tax laws vary; consult a tax professional to determine how your state treats Roth 401(k) distributions.
**** You may also be subject to a 10% additional federal tax on earnings if you take a withdrawal before age 59½, unless an exception applies.
Case study with different tax scenarios
Everyone’s situation is different, and you can’t predict what your taxes might be years from now. But let’s look at a fictional participant, Eva, and the hypothetical value of her account when she retires depending on her taxes at that time.
About Eva:
Age: 29
Marital status: Single
Annual income: $50,000
Annual 401(k) contribution: 8%, or $4,000 before taxes
What if Eva thinks her tax rate at retirement is likely to be:
In this scenario, Eva anticipates that her tax rate when she withdraws her money will be the same as it is now – 22%.
|
Current tax rate: 22% |
Pre-tax contributions |
Roth 401(k) contributions |
|---|---|---|
|
Total contributions until retirement age (36 years) |
$144,000 |
$122,320 |
|
Current taxes |
$0 |
$31,680 |
|
Total contributions plus current taxes |
$144,000 |
$144,000 |
|
Hypothetical value at retirement age |
$491,831 |
$383,628 |
|
Taxes at retirement |
$108,203 |
$0 |
|
Hypothetical value at retirement after taxes (age 65) |
$383,628 |
$383,628 |
At the same tax rate, all other things being the same, Eva's account balance at retirement would be the same with pre-tax or Roth 401(k) contributions.
This hypothetical illustration assumes the variables shown above, a pay frequency of monthly, with a 6% annual effective rate of return. Changes in tax rates may impact the comparative results. Please consider your investment horizon and tax brackets, both current and anticipated, when making an investment decision, as these may further impact the results of the comparison. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost. If you make pre-tax [traditional 401(k)] contributions, federal income taxes are due upon withdrawal. If you make Roth 401(k) contributions, taxes are deducted before contributions are made, and federal income taxes will not be due on your contributions and any earnings upon a qualified distribution. You may be subject to a 10% additional federal tax on any pre-tax assets (and any earnings on the Roth 401(k) contributions) you withdraw prior to reaching age 59½, if no exception applies.
In this scenario, Eva anticipates that her tax rate when she withdraws her money will be 30% - higher than her current 22% rate.
|
Current tax rate: 22% |
Pre-tax contributions |
Roth 401(k) contributions |
|---|---|---|
|
Total contributions until retirement age (36 years) |
$144,000 |
$112,320 |
|
Current taxes |
$0 |
$31,680 |
|
Total contributions plus current taxes |
$144,000 |
$144,000 |
|
Hypothetical value at retirement age |
$491,831 |
$383,628 |
|
Taxes at retirement |
$147,549 |
$0 |
|
Hypothetical value at retirement after taxes (age 65) |
$344,282 |
$383,628 |
With a higher tax rate, Eva's Roth 401(k) contributions may be worth $39,346 more than pre-tax contributions at retirement.
This hypothetical illustration assumes the variables shown above, a pay frequency of monthly, with a 6% annual effective rate of return. Changes in tax rates may impact the comparative results. Please consider your investment horizon and tax brackets, both current and anticipated, when making an investment decision, as these may further impact the results of the comparison. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost. If you make pre-tax [traditional 401(k)] contributions, federal income taxes are due upon withdrawal. If you make Roth 401(k) contributions, taxes are deducted before contributions are made, and federal income taxes will not be due on your contributions and any earnings upon a qualified distribution. You may be subject to a 10% additional federal tax on any pre-tax assets (and any earnings on the Roth 401(k) contributions) you withdraw prior to reaching age 59½, if no exception applies.
In this scenario, Eva anticipates that her tax rate when she withdraws her money will be 15% - lower than her current 22% rate.
|
Current tax rate: 22% |
Pre-tax contributions |
Roth 401(k) contributions |
|---|---|---|
|
Total contributions until retirement age (36 years) |
$144,000 |
$122,320 |
|
Current taxes |
$0 |
$31,680 |
|
Total contributions plus current taxes |
$144,000 |
$144,000 |
|
Hypothetical value at retirement age |
$491,831 |
$383,628 |
|
Taxes at retirement |
$73,775 |
$0 |
|
Hypothetical value at retirement after taxes (age 65) |
$418,057 |
$383,628 |
With a lower tax rate, Eva's pre-tax contributions may be worth $34,429 more than Roth 401(k) contributions at retirement.
This hypothetical illustration assumes the variables shown above, a pay frequency of monthly, with a 6% annual effective rate of return. Changes in tax rates may impact the comparative results. Please consider your investment horizon and tax brackets, both current and anticipated, when making an investment decision, as these may further impact the results of the comparison. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost. If you make pre-tax [traditional 401(k)] contributions, federal income taxes are due upon withdrawal. If you make Roth 401(k) contributions, taxes are deducted before contributions are made, and federal income taxes will not be due on your contributions and any earnings upon a qualified distribution. You may be subject to a 10% additional federal tax on any pre-tax assets (and any earnings on the Roth 401(k) contributions) you withdraw prior to reaching age 59½, if no exception applies.
