Guide to the Roth 401k/403b

Learn how a Roth 401k or 403b account works, and why this may be the best choice for your retirement savings at work.

Beginning in 2006, 401k and 403b participants at many companies can choose to make their retirement plan contributions to an account that works much like a Roth IRA. We have complete coverage of these accounts, including an explanation of how they make it possible to build more wealth for your retirement. Throughout these pages, references to 401k apply to 403b accounts as well.

The Pension Protection Act of 2006 removes the sunset provision for the Roth 401k, making this savings option permanent.

Understanding the Roth 401k

Roth 401k Overview
Tax-free retirement savings come to the 401k world.

Roth 401k Compared with Traditional 401k
How one type of account differs from the other.

Roth 401k Compared with Roth IRA
The Roth 401k offers some significant advantages over the Roth IRA.

A Roth Account Means More Wealth
A simple way to choose the Roth account.

Contributing to a Roth 401k Account
Let's walk through an example.

The Rules

Who's Eligible for the Roth 401k?
There are just two requirements.

The Five-Year Requirement
This is one of the tests to take qualified distributions from a Roth 401k account.

Distributions from Roth 401k Accounts
They're similar to Roth IRA distributions, but with some important differences.

Rollovers from Roth 401k Accounts
When you're eligible to take money from your Roth 401k account, you can roll it to a Roth IRA or to another employer's Roth 401k.

Contributions Over the Limit
How to handle a situation where you go over the limit for contributions to a Roth 401k account.