This is a type of retirement account that is a 401k, so you can receive employer sponsored contributions and deposit matches like a traditional 401k through your paycheck. These companies also difference is, it’s a Roth account so it’s already taxed and you don’t pay taxes again when you withdraw money in retirement—you’ve already paid it. This makes it a double tax haven still since you can avoid higher income taxes in your older years when inflation also increases, requiring more money for you to need every month; AND, you can still use it to reduce your current taxable income every year when you file taxes as you would a traditional 401k. All of the gains you make over time will not be subject to taxed either so ling as you maintain the account for a minimum of five years and are no younger than 59 1/2 when you withdraw; otherwise you pay penalties like other 401k accounts.

There are income limits to a Roth 401k which are based off your MAGI: Modified Annual Gross Income that is on your tax returns as stated income. This after deductions and other write offs do you need to have a CPA verify you won’t exceed the federal IRS limits of $150k as a single filer or $263,000 if filing jointly—again have your CPA do the taxes and verify the income can be adjusted legally under the limits.

All 401k accounts have a maximum total contribution limit of $23,000 for those under 50; or if older, it’s $31,000. This means even if you have both, which you can, the TOTAL amount even with two accounts is still the same. You cannot exceed these limits factoring in employer contributions as well so keep track of how much you put in. The other rule is your contributions cannot exceed your stated income on your taxes. Roth and traditional 401ks have RMD limits at ages 72/73 where you must withdraw a minimum amount per year or be penalized 10-25%. Again, talk to your HR department and CPA for guidance.

Overall, the rules and basics of how you contribute every paycheck are the same as a traditional 401k. The main difference is when you get taxed. The Roth IRA is a post tax retirement account because the money is sent through your employer after you have been taxed on your payday check so you already have paid. For a traditional 401k, you pay taxes in retirement as you’re living off the money. Whenever you plan on being in a lower tax bracket is how you should plan your retirement accounts. If you expect to be making more or needing more in the future, then a Roth IRA is likely best for you. If you’re hoping to need less and live on less, a traditional 401k is likely your best option. A CPA can help you with this too or a financial advisor.