What Are the Roth 401k Contribution Limits?

A Roth 401(k) is an employer-sponsored retirement savings plan funded with post-tax dollars, which allows for contributions and their earnings to be withdrawn tax-free in retirement if certain conditions are met. The Internal Revenue Service (IRS) dictates the maximum amount an individual can contribute to their account each year. The IRS adjusts these regulations for inflation, so savers should stay informed about current limits to maximize savings and avoid penalties.

Employee Contribution Limits

The Internal Revenue Service sets annual limits on how much an employee can contribute to 401(k) plans. For 2025, the maximum employee contribution is $23,500. This limit applies to the total amount an employee contributes, whether to a Roth 401(k), a traditional pre-tax 401(k), or a combination of both. For example, if an employee contributes $10,000 to a traditional 401(k), they can only contribute up to $13,500 to their Roth 401(k) that year.

The tax code allows for catch-up contributions to help individuals nearing retirement. For 2025, individuals age 50 and over can contribute an additional $7,500. This brings the total possible employee contribution to $31,000 for those eligible.

A provision from the SECURE 2.0 Act, effective in 2025, introduces a higher catch-up limit for individuals aged 60 through 63. For this age group, the catch-up amount is $11,250, bringing their total possible employee contribution to $34,750 if their plan allows it. These employee limits are distinct from any contributions made by an employer.

Clarifying Common Limit Misconceptions

A frequent point of confusion is whether income affects the ability to contribute to a Roth 401(k). Unlike a Roth IRA, which has income phase-outs that can reduce or eliminate the ability to contribute, the Roth 401(k) has no such income restrictions. An individual can contribute up to the legal limit regardless of their modified adjusted gross income.

Another misunderstanding involves how 401(k) limits interact with Individual Retirement Account (IRA) limits. The contribution limits for 401(k) plans and IRAs are entirely separate. An individual eligible for both can contribute the maximum allowed to each in the same tax year. For 2025, a person could contribute up to the $23,500 limit to their 401(k) and also contribute up to the $7,000 IRA limit.

Someone age 50 or over could potentially contribute $31,000 to their 401(k) ($23,500 base + $7,500 catch-up) and an additional $8,000 to their IRA ($7,000 base + $1,000 catch-up) in 2025. The ability to max out both accounts is not dependent on the other.

The Overall Contribution Limit

Beyond the limit on employee salary deferrals, the IRS imposes an overall limit on total annual additions to a 401(k) plan from all sources. For 2025, this total limit is $70,000. This figure includes the employee’s contributions, any employer matching contributions, and other employer allocations like profit sharing.

For instance, if an employee under 50 contributes their maximum of $23,500 in 2025, their employer can contribute up to an additional $46,500. This can be through matching funds or other plan contributions before hitting the $70,000 ceiling.

For those eligible for catch-up contributions, the overall limit is increased by the amount of their catch-up. This means the total combined limit can reach $77,500 for those age 50 or over, and $81,250 for those ages 60 to 63, if their plan permits the enhanced catch-up.

Correcting Excess Contributions

If an employee contributes more than the annual limit set by the IRS, this is known as an excess deferral. This can occur if someone changes jobs mid-year and contributes to 401(k) plans at both employers. The employee is responsible for identifying this over-contribution and must notify their plan administrator to request a corrective distribution.

The deadline for correcting the excess is April 15 of the year following the over-contribution, and this date is not extended even if the individual files for an extension on their tax return. The plan administrator will then distribute the excess contribution, plus any investment earnings attributable to that excess amount.

The tax consequences depend on the timing of the correction. If the excess is withdrawn by the April 15 deadline, the principal amount of the excess Roth contribution is not taxed upon withdrawal. However, the earnings distributed with the excess are considered taxable income for the year the contribution was made. Failure to correct the excess by the deadline results in double taxation: the amount is taxed when contributed and again when it is eventually distributed.