The contribution limits for IRAs and 401(k)s are the same whether the account is a Roth or a traditional version. The figures are usually adjusted for inflation every y🌃ear but they sometimes remain the same.

You may have the choice of putting your money into a traditional or a Roth 401(k) if you have access to a 401(k) with your employer. You can save for your retirement through an 澳洲幸运5官方开奖结果体彩网:ind🌊ividual retirement account (IRA) if you're self-employed or have freelance income, choosing a Roth or a traditional IRA. The big difference is in the amount of money you can save in e🌟ach of these t🔯ax-advantaged retirement accounts.

Roth 401(k)

The Roth 401(k) has only been available since 2006. Modeled after the Roth IRA, the Roth 401(k) provides investors with an opportunity to save retirement funds in a 澳洲幸运5官方开奖结果体彩网:tax-advantaged account.

Unlike its traditional counterpart, the Roth 401(k) account is funded with after-tax instead of pre-tax dollars. That means you won't receive a 澳洲幸运5官方开奖结果体彩网:tax deduction for your contrib✅utions😼 to a Roth 401(k), but down the road, you won't owe any tax on your qualified distributions.

Offering a Roth 401(k) (or Roth 403(b), for non-profit organizations) is voluntary for employers. To offer such a plan, employers must have a traditional 401(k) plan in place, and they must set up a tracking system to segregate Roth assets from those of traditional 401(k) assets. This may be an expensive proposition, and your employer may 💞choose not to do it.

An employer may 澳洲幸运5官方开奖结果体彩网:match contributions to a Roth 401(k). In fact, if an employer matches a traditional 401(k) plan contribution, it is standard for it to match one for a Roth 401(k). But unlike the employee's contribution, the employer's contribution is placed into a traditional 401(k) plan. That m💛eans the employer's match will be taxabl🌠e when the money is withdrawn. 

Roth 401(k) Contribution Limits

The contribution limits are adjusted for inflation each year. The limits for Roth 401(k)s are as follows:

• The 2025 maximum contribution to a Roth 401(k) is $23,500. The catch-up contribution is $7,500.
• The 2024 maximum contribution to a Roth 401(k) is $23,000. The catch-up contribution is $7,500.
  

Roth IRA

Named after 澳洲幸运5官方开奖结果体彩网:Delaware Senator William Roth, and established by the 澳洲幸运5官方开奖结果体彩网:Taxpayer Relief Act of 1997, a Roth IRA is an individual retirement plan (a type of qualified retirement plan) that bears many similarities to the 澳洲幸运5官方开奖结果体彩网:traditional IRA. Thꦫe biggest distinction between the two is how they’re taxed.

Traditional IRA contributions are generally made with pre-tax dollars; you usually get a tax deduction on your contribution and pay income tax when you withdraw the money from the account after retiring.

However, Roth IRAs are funded with after-tax dollars. The contributions are not usually tax-deductible. Taxpayers with moderate incomes may be eligible for a 澳洲幸运5官方开奖结果体彩网:Saver's Tax Credit of 10% to 50% of the contribution.

But once you start withdrawing funds from a Roth IRA, 澳洲幸运5官方开奖结果体彩网:qualified distributions are tax-free.

IRAs, whether Roth or traditional, are not available through employers. They can be opened by any taxpayer who has earned income and are available at most banks, brokerages, and other financial institutions.

Roth IRA Contribution Limits

The maximum allowable contribution to a Roth IRA in 2025 is $7,000. Individuals who are age 50 and over can contribute an additional $1,000 as a 澳洲幸运5官方开奖结果体彩网:catch-up contribution for a total of $8,000. These figures remain unchanged from 2024.

How the Contribution Limits Work

Contribution limits change each year and are published by the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) annually:

• You can save up to $23,500 in a 401(k) in the 2025 tax year. You can add up to $7,500 as a catch-up contribution if you're age 50 or older so you can invest a total of $31,000 if you've reached this age.
• You can save a maximum of $23,000 in a Roth 401(k) in the 2024 tax year. The catch-up amount remains the same at $7,500 so people 50 and older can invest $30,500.
• The maximum you can contribute to a Roth IRA in 2025 is $7,000. You can add another $1,000 for a total contribution of $8,000 if you're 50 or older.
• The 2024 maximum contribution to a Roth IRA is $7,000. The catch-up contribution remains the same at $1,000 allowing a total contribution of $8,000.

Mixing Roth and Traditional IRAs

Th𒅌e contribution limits are the same for Roth and traditional versions of 401(k)s and IRAs.

If you want to contribute to both a Roth and a traditional 401(k), the maximum amounts remain the same, though you can split your contributions between accounts in any way you like. 

One financial strategy, for those who want to maximize their ta𓆉x-advantaged savings: Open both types of Roth accounts. You can invest up to the combined allowable limits in a Roth 401(k) and a Roth IRA.  

Roth IRA Income Limits

With Roth IRAs, there are limits to what you can contribute or even whether you can have one at all, based on your income. Generally, the higher it is, the more restricted your contributions. The Roth 401(k) has no income limits. That means you don’t have to worry about your access to a Roth account phasing out as your income rises.

Overall contributions to a Roth 401(k) can't exceed your compensation, of course. The combined total of employee and employer contributions cannot exceed the lesser of:

• 100% of the account holder's compensation
• $70,000 in tax year 2025 plus an additional $7,500 for those age 50 or older.
• $69,000 in tax year 2024 plus an additional $7,500 for those age 50 or older
  

Roth Rollovers

If you are getting a new job, you might be considering rolling over yo♏ur current Roth 401(k) into a new 📖or existing Roth IRA account.

When it comes to rollovers, there is no contribution limit; you can transfer whatever is in your account. Just be sure to have the old account's trustee or manager directly roll over the money to the new account, or at least make sure the check is made out to the new manager as t♌he account trustee.

If the money is paid into your hands personally, you could be required to pay a tax penalty.

The Bottom Line

Contribution limits on all tax-advantaged accounts are indexed to inflation. This mꦜeans the IRS re-evaluates and revises the maximum amounts people can contr💯ibute to IRAs and 401(k)s each year. If you’re contributing near the maximum allowed, be sure you stay on top of the annual limits.