Tax Benefits

• Roth 401(k)s are not deductible from your taxes like contributions that are made to a traditional 401(k). However, Roth 401(k) plans are tax-sheltered accounts, which means the money grows tax free in the account, and you are allowed to take the money out tax-free at retirement.
  
  

Contribution Limits

• The amount you can contribute to a traditional 401(k) plan applies cumulatively to Roth 401(k) plans as well. This amount is changed each year to reflect increases in the cost of living. For 2009, the limit for contributions to both traditional and Roth 401(k) plans is $16,500 if you are under 50 and $22,000 if you are 50 or older.
  
  

Eligibility

• You can only participate in a Roth 401(k) plan if it is offered by your employer. In addition, you must have taxable income to contribute.
  
  

Employer Matching Contributions

• Your employer can match your Roth 401(k) plan contributions without you having to report the matching as part of your income but these matching contributions must be put in a traditional 401(k) plan because the contributions are made with pretax dollars.
  
  

History

• Roth 401(k)s were officially made an option on 2006. The Economic Growth and Tax Relief Reconciliation Act of 2001 allowed 401(k) contributions to be made with after-tax dollars so they would be treated the same way as Roth IRA contributions.