What is a Roth 401K?

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What is a Roth 401K?

What Is a Roth 401(k)?

While many people are familiar with the benefits of traditional 401(k) plans, others are not as acquainted with Roth 401(k)s.

Since January 1, 2006, employers have been allowed to offer workers access to Roth 401(k) plans. And starting in 2023, retirement rules were updated to allow more retirement plans the ability to offer Roth contributions.1,2

As the name implies, Roth 401(k) plans combine features of 401(k) plans with those of a Roth IRA.3,4

With a Roth 401(k), contributions are made with after-tax dollars – there is no tax deduction on the front end – but qualifying withdrawals are not subject to income taxes. Any capital appreciation in the Roth 401(k) also is not subject to income taxes.

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