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Designated Roth Account

Also called: Roth 401(k), Roth 403(b), designated Roth contributions

Definition: A designated Roth account is a separate account inside a 401(k), 403(b) or governmental 457(b) plan that holds after-tax Roth contributions and pays qualified withdrawals tax-free.

Updated November 8, 2026 · How we check facts

A designated Roth account, commonly called a Roth 401(k), is a separate account in an employer plan. Contributions are included in gross income in the year they are made, so there is no tax deduction. Eligible withdrawals, including earnings, are generally tax-free.

Unlike a Roth IRA, there is no income limit for making designated Roth contributions. The plan must offer the feature; an employer is not required to.

Key rules

  • The same annual deferral limit covers Roth and pre-tax contributions combined: $24,500 for 2026 (see the 2026 limits guide).
  • A withdrawal is tax-free only if it is a qualified distribution.
  • Employer matching contributions on Roth deferrals are allocated to a pre-tax account, according to IRS guidance.
  • Balances are not subject to required withdrawals during the owner's life, but beneficiaries must follow the distribution rules.

Example

An employee contributes $5,000 to the Roth side and $10,000 to the pre-tax side in 2026. The total of $15,000 is within the $24,500 limit, leaving $9,500 of room. Only the pre-tax $10,000 lowers taxable pay.

For a full comparison of the two account types, read 401(k) vs Roth 401(k) and try the 401(k) calculator.

Educational only, not tax or investment advice.

Calculate it

Free tool401(k) CalculatorWhat your 401(k) will be worth at retirement.Free toolRoth IRA CalculatorTax-free balance at retirement and your 2026 limit.

Guides that explain it

Related terms

401(k)A 401(k) is an employer-sponsored retirement savings plan in which employees contribute part of their pay, often with employer matching, up to annual limits set by the IRS.Qualified DistributionA qualified distribution is a Roth withdrawal that is tax-free because the account met the five-year holding period and the owner is 59½ or older, disabled, or has died.Pre-Tax ContributionA pre-tax contribution is money put into a retirement plan before income tax is applied, which lowers taxable pay now and makes later withdrawals taxable as ordinary income.Employer MatchAn employer match is money an employer adds to an employee's 401(k) based on the employee's own contributions, usually a percentage of pay, and it counts toward the total annual limit.Annual Percentage Rate (APR)Annual percentage rate (APR) is the cost of credit expressed as a yearly rate; for many loans it combines the interest rate with certain fees charged when the loan is made.Annual Percentage Yield (APY)Annual percentage yield (APY) is the total interest a deposit account pays over a 365-day period, expressed as a percentage that includes the effect of compounding.Catch-Up ContributionA catch-up contribution is an extra amount that people age 50 or older may add to a 401(k) or similar retirement plan above the normal annual limit, if the plan permits it.Compound InterestCompound interest is interest calculated on both the original principal and the interest already added to it, so the balance grows faster than it would with simple interest.

Sources

  1. IRS — Retirement plans FAQs on designated Roth accounts
  2. IRS — Roth comparison chart