:max_bytes(150000):strip_icc():format(jpeg)/Roth401k-dbdadb9f81014f78aa3f8544454cdfc7-e418ab69506a45378d97581b97045195.jpeg)
Roth 401(k) plans are typically matched at the same rate as traditional 401(k) plans. The matching contributions provided by an employer were historically placed in a traditional 401(k), and employee contributions were held in the Roth 401(k). The SECURE 2.0 Act changed this in December 2022, however, making it possible for employers to make matching contributions to employees’ Roth 401(k)s.
Key Takeaways
- A Roth 401(k) is an employer-sponsored, tax-advantaged account that’s similar to a traditional 401(k) plan but with a significant difference.
- A Roth 401(k) is funded with post-tax dollars, whereas a traditional 401(k) is funded using pretax income.
- Employer matching contributions to an employee’s Roth 401(k) are typically deposited into a separate, traditional 401(k). The SECURE Act changed that in December 2022.
- Employers now have the option to match contributions in the employee’s Roth 401(k) account rather than in a separate, traditional 401(k) account.
- You won’t be taxed on your investment returns at the time of withdrawal from a Roth 401(k) if you’re age 59½ or older and it’s been at least five years since you first contributed to the account.
Traditional 401(k) vs. Roth 401(k)
A Roth 401(k) is an employer-sponsored investment account that’s similar to a traditional 401(k) plan except the contributions to the account are taxed upfront rather than at the time of withdrawal.
The account is funded with post-tax dollars: You contribute after the money has been taxed as income. You pay taxes now rather than later, so this account may be attractive to investors who expect to be in a higher tax bracket when they retire. They may want to avoid paying taxes on their investment returns at that time.
You make contributions to a traditional 401(k) with pretax dollars, so more money goes in right at the start, giving you a larger amount to invest. The contributions reduce your taxable income in the year you make them, so they might move you to a lower tax bracket. You must pay taxes on both your initial investment and your investment returns that have accumulated over the years when the funds are withdrawn, however.
A Roth 401(k) allows you to take withdrawals tax-free, provided that you’re at least age 59½ and it’s been five years or more since you first contributed to the account.
Contribution Limits
Contribution limits are the same for both traditional and Roth 401(k)s. Employees can contribute up to $23,500 to 401(k) accounts in 2025 with an additional catch-up contribution of $7,500 for those age 50 or older. This increases to an additional $11,250 for those ages 60 to 63. These thresholds are up from $23,000 and $7,500, respectively, in 2024.
The combined limit for employee and employer contributions for 2025 is $70,000 or 100% of the employee’s compensation, whichever is less, up from $69,000 in 2024. The catch-up provisions also apply to these thresholds.
Rollovers
A traditional 401(k) plan can be rolled into a Roth 401(k) plan, but you’ll pay taxes on the amount rolled over. Funds can’t be moved into a traditional 401(k) plan after the money from any source is in the Roth 401(k). They can be rolled over to a Roth individual retirement account (IRA), however.
Employer Matches
If an employer matches contributions to traditional 401(k) accounts, it’s standard for them to match contributions to Roth 401(k) accounts, too. The employer’s contribution was traditionally placed into a traditional 401(k) plan, so it would be taxable upon withdrawal. This changed with the passage of the SECURE 2.0 Act in December 2022.
Important
The passage of the SECURE 2.0 Act in December 2022 has made it possible for employers to make matching contributions to employees’ Roth 401(k)s. This important change went into effect immediately upon passage of the Act. The move is optional for all participants, however. It’s not required.
There are two key types of employer matching: dollar-for-dollar and partial.
Dollar-for-Dollar Matching
The employer will match 100% of your contributions with dollar-for-dollar matching, generally up to a certain percentage of your salary. Your employer will match the exact amount or 4% if its matching formula is a dollar-to-dollar match up to 6% and you choose to contribute 4% of your salary to a 401(k). Your employer won’t go beyond its stated 6% cap, however, if you contribute 15%, which is the recommended amount. It won’t match the extra 9%.
Partial Matching
Partial matching is when your employer matches part but not all of your contribution, usually up to a percentage of your salary. The most common matching formula is $.50 per dollar on the first 6% of your salary, according to Vanguard.
Is Employer Roth 401(k) Matching Taxable?
No, the contribution isn’t taxable if the employer’s matching contribution for Roth 401(k) holders goes into a traditional account because these contributions are made on a pre-tax basis. If the matching contribution goes into a Roth account, then yes, it’s taxable.
Does Your Employer Match Count Toward the Roth 401(k) Limit?
No. Employer matches don’t count toward the employee contribution limit that was $23,000 in 2024 and increases to $23,500 for 2025, plus a $7,500 catch-up contribution for those age 50 or older and additional catch-up contributions permitted under SECURE 2.0.
How Are Roth 401(k) Contributions Calculated in Your Paycheck?
Your Roth 401(k) contribution will show up as a line item on your pay stub that reduces your after-tax income.
The Bottom Line
Matching contributions for a Roth 401(k) are typically deposited into a separate, traditional 401(k) account. When you make a withdrawal in retirement, these funds (plus earnings) will be taxed by the IRS as income, unlike the funds in a Roth 401(k).
Thanks to the SECURE Act in December 2022, an employer may instead match an employee’s contributions in their Roth account, rather than in a traditional account.
Correction-July 26, 2025: This article has been corrected to state that the 2025 contribution limit is $23,500 before catch-up contributions.
