Roth 401(k) plans offer tax-free withdrawals in retirement, making them an attractive savings option. However, eligibility is subject to income limits. For 2023, individuals earning less than $138,000 ($218,000 for married couples filing jointly) can contribute to a Roth 401(k). Those with higher incomes may still make catch-up contributions if they are 50 or older. These limits ensure that Roth 401(k) plans primarily benefit middle- and lower-income earners, encouraging retirement savings among those who may have limited access to other tax-advantaged savings options.
Roth 401k Contribution Limits
Unlike traditional 401k plans, Roth 401ks have income limits that determine eligibility for making contributions. Individuals who exceed these limits cannot contribute to a Roth 401k.
The table below outlines the 2023 Roth 401k contribution limits based on income:
| Filing Status | Contribution Limit |
|---|---|
| Single | $22,500 |
| Married Filing Jointly | $30,000 |
| Married Filing Separately | $0 |
| Head of Household | $22,500 |
It is important to note that these limits apply to both employee and employer contributions. If an employer makes matching contributions, the employee’s contribution limit will be reduced accordingly.
- Individuals with incomes above the following limits cannot contribute to a Roth 401k:
- Single: $153,000
- Married Filing Jointly: $228,000
- Married Filing Separately: $0
- Head of Household: $214,000
If an individual’s income exceeds these limits, they may still be able to contribute to a traditional 401k.
Income Limits for Roth 401k Eligibility
The Roth 401k, like the traditional 401k, is a retirement savings plan offered by many employers. However, unlike the traditional 401k, the Roth 401k allows you to make after-tax contributions, which grow tax-free and can be withdrawn tax-free in retirement. As a result, there are income limits on who is eligible to contribute to a Roth 401k.
- For 2023, the Roth 401k income limit for single filers is $138,000. For married couples filing jointly, the limit is $218,000. These limits are up from $132,000 and $204,000 in 2022.
- If your income exceeds these limits, you may still be able to contribute to a Roth 401k, but your contributions will be subject to a reduced limit. For 2023, the reduced contribution limit is $6,500 ($7,500 if you are age 50 or older). The reduced limit applies to all income levels above the eligibility limits.
Here is a table summarizing the Roth 401k income limits for 2023:
| Filing Status | Income Limit |
|---|---|
| Single | $138,000 |
| Married Filing Jointly | $218,000 |
If you are not eligible to contribute to a Roth 401k, you may want to consider contributing to a traditional 401k or another retirement savings plan. If you have any questions about Roth 401k income limits, you should consult with a tax or financial advisor.
After-Tax Contributions to Roth 401k
Unlike traditional 401k contributions, which are made with pre-tax dollars, Roth 401k contributions are made with after-tax dollars. This means that you pay taxes on your contributions now, but you can withdraw your earnings tax-free in retirement.
There are no income limits for making after-tax Roth 401k contributions. However, the amount you can contribute each year is limited to the lesser of:
- $66,000 for 2023 ($73,500 for those age 50 and older)
- 100% of your compensation
In addition, you can also make catch-up contributions if you are age 50 or older. The catch-up contribution limit for 2023 is $7,500.
Here is a table summarizing the contribution limits for after-tax Roth 401k contributions:
| Age | Regular Contribution Limit | Catch-Up Contribution Limit |
|---|---|---|
| Under 50 | $66,000 | N/A |
| 50 and older | $73,500 | $7,500 |
Roth 401k Eligibility
Roth 401(k)s offer tax-free retirement savings. However, to be eligible to contribute to a Roth 401(k), you must meet certain income limits.
- For 2023, the Roth 401(k) income limits are:
- Phase-out range for single filers: $138,000 to $153,000
- Phase-out range for married couples filing jointly: $218,000 to $228,000
If your modified adjusted gross income (MAGI) is within the phase-out range, you can still make Roth 401(k) contributions, but the amount you can contribute will be reduced.
Roth 401k Conversion Eligibility
In addition to income limits for contributions, there are also income limits for converting a traditional 401(k) to a Roth 401(k).
- For 2023, the Roth 401(k) conversion income limits are:
- No income limit for married couples filing jointly who file separately
- Modified AGI limit of $10,000 for single filers and married couples filing jointly
If your MAGI is above the limit, you cannot convert your traditional 401(k) to a Roth 401(k).
| Filing Status | Contribution Limit | Conversion Limit |
|---|---|---|
| Single | $22,500 ($30,000 with catch-up contributions) | $10,000 |
| Married filing jointly | $22,500 ($30,000 with catch-up contributions) | $10,000 |
| Married filing separately | No limit | No limit |
Well folks, that’s the scoop on Roth 401k income limits. Remember, these limits are subject to change, so always check with the IRS for the latest info. Thanks for hanging with me, and come back again soon for more retirement-savings wisdom. Keep hustling and growing that nest egg!