Is There a Limit to Roth 401(k) Contributions?

A Roth 401(k) plan offers a valuable way to save for retirement, combining features of a traditional 401(k) with the tax advantages of a Roth IRA. Contributions to a Roth 401(k) are made with after-tax dollars, meaning qualified withdrawals in retirement are tax-free. These plans are subject to specific contribution limits set by the Internal Revenue Service (IRS). Understanding these limits is important for effective retirement planning.

Understanding Roth 401(k) Contribution Limits

The primary annual limit for Roth 401(k) contributions applies to the amount an employee can elect to defer from their salary. For the 2025 tax year, individuals can contribute up to $23,500 to their Roth 401(k) accounts. This limit, known as the elective deferral limit, is set by the IRS and is periodically adjusted for inflation to reflect changes in the cost of living.

This elective deferral limit encompasses all employee contributions, whether they are made to a Roth 401(k), a traditional 401(k), or a combination of both. Employer contributions, such as matching funds or profit-sharing contributions, do not count against an employee’s personal elective deferral limit.

While employer contributions are separate from the employee’s deferral limit, they are part of a broader overall plan limit under Internal Revenue Code Section 415. This higher limit, which includes both employee and employer contributions, can reach up to $70,000 for 2025. This comprehensive limit is generally a concern for plan administrators rather than individual employees.

A key distinction of the Roth 401(k) compared to a Roth IRA is the absence of income limitations for contributions. Regardless of how much an individual earns, they are eligible to contribute to a Roth 401(k) if their employer offers one. This contrasts with Roth IRAs, which have adjusted gross income (AGI) thresholds that can restrict or eliminate eligibility for direct contributions.

Contributions to a Roth 401(k) are typically facilitated through payroll deductions. The elective deferral limit applies to the individual taxpayer across all their 401(k), 403(b), and Thrift Savings Plan (TSP) accounts, even if they contribute to multiple plans.

Special Rules for Older Savers

Individuals approaching retirement age are often granted the opportunity to contribute additional funds to their Roth 401(k) plans through what are known as catch-up contributions. These provisions allow older workers to accelerate their retirement savings during their peak earning years.

For 2025, individuals aged 50 and older can contribute an additional $7,500 above the standard elective deferral limit. This means that for most eligible savers, the total employee contribution limit for a Roth 401(k) for 2025 becomes $31,000 ($23,500 standard limit plus $7,500 catch-up). This additional amount applies equally to both traditional and Roth 401(k) contributions.

A further enhancement to catch-up contributions takes effect in 2025 for a specific age group. Participants aged 60 through 63 can contribute an even higher amount, up to $11,250 as a catch-up contribution. This increases their total employee contribution limit to $34,750 for 2025, provided their plan allows for this higher amount. These catch-up contribution limits are also subject to periodic adjustments for inflation.

Handling Multiple Plans and Excess Contributions

The elective deferral limit applies to an individual’s total contributions across all their employer-sponsored retirement plans for a given tax year. This means if an individual contributes to multiple 401(k) plans, such as when changing jobs mid-year or holding concurrent employment with different employers, the sum of all their contributions cannot exceed the annual limit. For 2025, this aggregate limit remains $23,500 for those under 50, or higher with applicable catch-up contributions.

If an individual accidentally contributes more than the allowed limit across all their plans, these are considered excess deferrals. It is the individual’s responsibility to monitor their contributions and initiate the correction process if an over-contribution occurs.

To correct an excess deferral, the individual must notify their plan administrator and request a distribution of the excess amount, along with any earnings attributable to it. This distribution must generally occur by April 15 of the year following the year of the excess deferral. This deadline is not tied to the individual’s tax filing extension.

Failure to remove the excess contribution by the April 15 deadline can lead to double taxation. The excess amount will be taxed in the year it was contributed, and then it will be taxed again when it is eventually distributed from the plan in retirement. Any earnings on the excess contribution are taxable in the year they are distributed.