<P> Employers are permitted to make matching contributions on employees' designated Roth contributions . However, employers' contributions cannot receive the Roth tax treatment . The matching contributions made on account of designated Roth contributions must be allocated to a pre-tax account, just as matching contributions are on traditional, pre-tax elective contributions . (Pub 4530) </P> <P> In general, the difference between a Roth 401 (k) and a traditional 401 (k) is that income contributed to the Roth version is taxable in the year it is earned, but income contributed to the traditional version is taxable in the year in which it is distributed from the account . Furthermore, earnings on the traditional version are taxable income in the year they are distributed, but earnings on the Roth version are never taxable . </P> <P> There are restrictions on the nontaxability of Roth earnings: typically, the distribution must be made at least 5 years after the first Roth contribution and after the recipient is age 591⁄2 . </P> <P> A Roth 401 (k) plan is probably most advantageous to those who might otherwise choose a Roth IRA, such as younger workers who are currently taxed in a lower tax bracket but expect to be taxed in a higher bracket upon reaching retirement age . Higher - income workers may prefer a traditional 401 (k) plan because they are currently taxed in a higher tax bracket but would expect to be taxed at a lower rate in retirement; also, those near the Roth IRA income limits may prefer a traditional 401 (k) since its pre-tax contributions lowers Modified Adjusted Gross Income (MAGI) and thus increases eligibility for various other tax incentives (Roth IRA contributions, the Child Tax Credit, medical expense deduction, etc .). Another consideration for those currently in higher tax brackets is the future of income tax rates in the US: if income tax rates increase, current taxation would be desirable for a wider group). The Roth 401 (k) offers the advantage of tax free distribution but is not constrained by the same income limitations . For example, in tax year 2013, normal Roth IRA contributions are limited to $5,500 ($6,500 if age 50 or older); up to $17,500 could be contributed to a Roth 401 (k) account if no other elective deferrals were taken for the tax year, such as traditional 401 (k) deferrals . </P>

Is there an income limit for a roth 401k