Can I Contribute to a Roth 401(k) and a Traditional 401(k)?

A 401(k) plan is an employer-sponsored retirement savings account that offers tax advantages for individuals saving for their future. These plans generally come in two primary forms: Traditional 401(k)s and Roth 401(k)s. Contributions to a Traditional 401(k) are typically made with pre-tax dollars, meaning they reduce your taxable income in the year they are made. The money grows tax-deferred, and withdrawals in retirement are subject to income tax.

In contrast, contributions to a Roth 401(k) are made with after-tax dollars, so there is no immediate tax deduction. However, the money grows tax-free, and qualified withdrawals in retirement are entirely tax-free. Understanding these fundamental differences is a starting point for managing your retirement savings effectively.

Understanding Annual Contribution Limits

It is possible to contribute to both Traditional and Roth 401(k) accounts. However, the Internal Revenue Service (IRS) sets a single, combined annual limit for all employee contributions. This limit applies to the total amount an individual contributes from their salary, whether pre-tax to a Traditional 401(k), after-tax to a Roth 401(k), or a combination. For the 2025 tax year, the employee contribution limit is $23,500.

This overarching limit means that if you contribute $10,000 to a Traditional 401(k), you can then contribute no more than $13,500 to a Roth 401(k) in the same year. The total of your elective deferrals across all 401(k) plans you participate in during the calendar year cannot exceed this amount. This rule ensures that all employee salary deferrals, regardless of their tax treatment, are aggregated for federal contribution limit purposes.

For individuals aged 50 and over, the IRS allows for “catch-up contributions” to help boost retirement savings closer to retirement. For 2025, the standard catch-up contribution limit is an additional $7,500. This means an employee aged 50 or older can contribute up to $31,000 in total ($23,500 regular limit + $7,500 catch-up) to their 401(k) plans.

The SECURE 2.0 Act offers a higher catch-up contribution for individuals aged 60, 61, 62, and 63. For this age group, the catch-up limit for 2025 is $11,250, allowing for a total employee contribution of up to $34,750. These catch-up amounts also apply to the combined total of Traditional and Roth 401(k) contributions, providing flexibility in how older workers can allocate their additional savings.

Designating Your Contributions

The process of directing your contributions to a Traditional 401(k), a Roth 401(k), or both, is typically managed through your employer’s human resources department or the retirement plan administrator. Employers offering both options will provide a mechanism for you to specify your preferences. This often involves designating a percentage of your salary or a fixed dollar amount to be contributed from each paycheck.

You will then indicate how that designated amount should be split between the Traditional (pre-tax) and Roth (after-tax) components of your 401(k) plan. For instance, you might elect to contribute 10% of your salary, with 5% going to the Traditional 401(k) and 5% to the Roth 401(k). Plan participants usually have the flexibility to adjust their contribution elections throughout the year, though the specific frequency and methods for making changes are governed by the individual plan’s rules.

It is always important to ensure that the sum of all your elected contributions, across both Traditional and Roth options, remains within the established annual IRS employee contribution limits, including any applicable catch-up contributions. Regularly reviewing your contribution elections can help align them with your financial goals and ensure compliance with federal regulations.

Employer Contributions and Total Plan Limits

Beyond your personal contributions, employer contributions represent a distinct component of your 401(k) savings. Employer contributions, such as matching contributions or profit-sharing contributions, do not count towards your individual employee contribution limit of $23,500 (or higher with catch-up contributions). These employer-provided funds are added to your account separately and are subject to a different set of limits.

The IRS imposes an overall limit on the total “annual additions” to a participant’s defined contribution plan account, which includes both employee and employer contributions, as well as any allocated forfeitures from other participants’ accounts. This is often referred to as the Section 415(c) limit. For the 2025 tax year, this comprehensive limit is $70,000.

This higher limit ensures that the combined total of money flowing into your 401(k) from all sources in a given year does not exceed a specified threshold. While the employer is primarily responsible for monitoring and ensuring adherence to this overall plan limit, understanding its existence provides a complete picture of how 401(k) contributions are regulated. Your personal deferrals are just one part of the total amount that can be contributed to your retirement account annually.

Handling Excess Contributions

Contributing more than the IRS-mandated limit to your 401(k) in a single year, known as an “excess deferral,” requires prompt correction to avoid tax complications. If you have over-contributed, you must arrange for the excess amount, along with any earnings attributable to it, to be distributed from your plan. This distribution should occur by the tax filing deadline of the year following the excess contribution, typically April 15th.

The excess contribution itself is taxed in the year it was originally contributed, while any earnings on that excess are taxed in the year they are distributed. Failing to remove the excess deferral by the deadline can lead to double taxation, where the same money is taxed once in the year of contribution and again upon eventual withdrawal in retirement. Additionally, if you are under age 59½, an early distribution penalty of 10% may apply to the earnings portion of the excess if not corrected timely.

If an excess contribution occurs, contact your plan administrator immediately to initiate the correction process. Your employer may need to issue an amended Form W-2 to reflect the corrected deferral amount, and you will receive a Form 1099-R for the distributed excess and its earnings. Proactive communication with your plan administrator is the best way to navigate these situations and minimize potential tax liabilities.