Roth 401(k)
Business & Finance abbreviation · Personal Finance
| Stands for | Roth designated account within a 401(k) plan |
|---|---|
| Categories | Business & Finance |
Roth 401(k) stands for Roth designated account within a 401(k) plan, a personal finance abbreviation.
Option inside an employer 401(k) in which contributions come out of pay after tax, so qualified withdrawals in retirement are tax-free. It shares one employee deferral limit with the traditional 401(k), and unlike the Roth IRA it has no income cap on who may contribute.
Example: I split my deferral evenly between the traditional and Roth 401(k) to hedge against higher tax rates later.
Usage notes
Roth 401(k) accounts first became available in 2006 under the Economic Growth and Tax Relief Reconciliation Act of 2001. SECURE 2.0 eliminated required minimum distributions from these accounts starting in 2024 and allowed employers to make matching contributions on a Roth basis if the plan permits. Many retirees roll a Roth 401(k) into a Roth IRA for more investment choice.
Related abbreviations
More personal finance abbreviations
- PSLF – Public Service Loan Forgiveness
- QDRO – Qualified domestic relations order
- QLAC – Qualified longevity annuity contract
- RDSP – Registered Disability Savings Plan
- RESP – Registered Education Savings Plan
- RMD – Required minimum distribution
- Roth IRA – Roth individual retirement account
- RRIF – Registered Retirement Income Fund
- RRSP – Registered Retirement Savings Plan
- SEP IRA – Simplified Employee Pension individual retirement account
- SEPP – Substantially equal periodic payments
- SIMPLE IRA – Savings Incentive Match Plan for Employees individual retirement…