The main difference is that Roth contributions go in after tax and are not taxed on withdrawal.
People sometimes don’t realize that Roth 401(k)s only exist as extensions of Traditional 401(k) plans. Some plans have been designed to also permit after-tax contributions, which become that employee’s Roth 401(k) account.
This Roth side account has all of the same investment options as the rest of the plan on the traditional side. In fact, an employee can contribute to both the traditional 401(k) and Roth 401(k) with each payroll cycle.
The contribution limit ($18,000, or $24,000 for employees over 50) cannot be exceeded by the two accounts combined. So if an employee under 50 years old contributed $12,000 in pretax dollars to the traditional 401(k) account, he would only be permitted to contribute an additional $6,000 to the Roth side of his 401(k), and vice-versa.
Any employer contributions will be pretax dollars, just like the traditional 401(k), and these contributions will be kept in a separate account from the Roth 401(k) for taxation purposes. Interestingly, Roth 401(k)s are subject to RMDs, even though they are not taxed. A person can roll their Roth 401(k) into a Roth IRA to avoid having to take RMDs.
A 401(k) plan Administrator will usually be an officer of the Employer sponsoring the plan
Employers can contribute to an employee’s 401(k) on a matching basis. Some employers will make additional contributions
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