You can have both a Roth 401(k) account and a Roth IRA account. The contribution limits are separate.
| Roth 401(k) | Roth IRA | |
|---|---|---|
| Maximum contribution (2020) | Lesser of $19,500 or 100% of compensation | Lesser of $6,000 or 100% of earned income |
| Catch-up contribution if age 50 or older (2020) | $6,500 | $1,000 |
| Who can contribute? | Any eligible employee | Only taxpayers who earn less than: Single/Head of Household: $139,000 Married (filing jointly): $206,000 Married (filing separately): $10,000 |
| Lifetime required distributions after age 72? | Yes | No |
| Potential employer matching contribution? | Yes1 | No |
| Creditor protection in bankruptcy | Unlimited | $1,362,800 (all IRAs aggregated)2 |
| Loans available? | Yes, if plan permits | No |
| Five-year waiting period for qualified distributions? | Yes, from time you contribute to the plan3 | Yes, from time you contribute to ANY Roth IRA |
| Distributions4 | Upon termination of employment, age 59½, hardship, disability, and death | Any reason |
| Qualified tax-free distributions4 | 59½, disability, and death | 59½, disability, death, first-time homebuyer (up to $10,000 lifetime) |
| Nonqualified distributions | Pro-rata distribution of tax-free contributions and taxable earnings | Tax-free contributions distributed first, then taxable earnings |
| Rollovers | To a Roth IRA, Roth 401(k), Roth 403(b), or Roth 457(b); From a Roth 401(k) Roth 403(b), or Roth 457(b) |
To and from a Roth IRA; From a Roth 401(k), Roth 403(b), or Roth 457(b) From a traditional IRA, 401(k), 403(b), or 457(b)5 |
| Investment choices | Limited to investments offered by employer | Virtually unlimited |
1 Employer contributions and earnings are taxable when distributed.
2 Amounts rolled over from an employer qualified plan or 403(b) plan, plus earnings on the amount rolled over, also have unlimited creditor protection. Amount is scheduled to be adjusted in April 2022.
3 Or from the time you contributed to a previous employer’s Roth 401(k) plan, if you rolled over your balance from that plan to the current plan.
4 Depending on plan terms. Taxes and potential penalties apply to earnings paid in a nonqualified distribution.
5 Taxable conversion.