Roth 401k contribution limits in 2015 are $18,000 for employees under age 50 and $24,000 for those age 50 and above. Roth 401k contributions also have limits on total contributions from employers and employees combined. Our article explains. See the table below for 2014 and 2015 Roth 401k contribution limits.
- Traditional IRA Contribution Limits
- Roth IRA Contribution Limits
- SIMPLE IRA Contribution Limits
- SEP IRA Contribution Limits
- Traditional 401k Contribution Limits
- Roth 401k Contribution Limits
- One-Participant 401k Contribution Limits
- Coverdell ESA Contribution Limits
- HSA Contribution Limits
Roth 401k Contribution Limits
The table below shows traditional 401k contribution limits for 2014 and 2015.
Roth 401k contribution limits are the same as traditional 401k contribution limits.
Like traditional 401k, Roth 401k plans have two kinds of contribution limits: limits on contributions by employees and limits on overall contributions from employees and employers combined.
Employee contribution limits for 2014 are $17,500 for those under age 50. Those age 50 and over can make contributions of $23,000 in 2014 thanks to catch-up contributions. Catch-up contributions are additional contributions allowed to let lagging baby boomers increase their savings before retirement.
For 2015, those under age 50 face Roth 401k contribution limits of $18,000. Those over age 50 have Roth 401k contribution limits of $24,000.
Overall Roth 401k contribution limits in 2014 for total contributions by employers and employees combined are $52,000 for those under age 50 and $57,500 for everyone else. In 2015 overall contribution limits are $53,000 for those under age 50 and $59,000 for others.
Roth 401k are not actually separate 401k plans. Instead, they’re separate accounts in an existing 401k plan.
Traditional 401ks work by letting employees deposit money into investment accounts tax free. The money is then taxed when it’s withdrawn during retirement.
While this system offers several benefits to employees, the one major drawback is that the money in these 401k accounts is taxed after it’s been invested. That’s less than ideal because $100 taxed at 20% now results in a $20 tax bill, while $100 invested at 6% for 40 years and then taxed at 20% results in a $200 tax bill.
Employees can have their money taxed earlier for an overall tax savings by using Roth 401k contributions. With a Roth 401k account, contributions are taxed, but withdrawals during retirement are tax free.
- Unlike Roth IRAs, Roth 401ks have no income limits on contributions.
- To contribute to a Roth 401k, employees must have earned income.
- While Roth IRAs allow those without earned income to make IRA contributions if their spouse has earned income, Roth 401ks don’t work the same way. Taxpayers without earned income can’t make Roth 401k contributions even if their spouse has earned income.
- Retirement Plans FAQs on Designated Roth Accounts – IRS.gov
- Designated Roth Accounts – Contributing to a Designated Roth Account – IRS.gov