Enter a search term.
line drawing document and pencil

File a claim

Need to file an insurance claim? We’ll make the process as supportive, simple and swift as possible.

Action Teams

If you want to make an impact in your community but aren't sure where to begin, we're here to help.
Illustration of stairs and arrow pointing upward

Contact support

Can’t find what you’re looking for? Need to discuss a complex question? Let us know—we’re happy to help.
Use the search bar above to find information throughout our website. Or choose a topic you want to learn more about.

Roth 401(k) vs. traditional 401(k): What's the difference?

Businesswoman working on laptop at desk in office
Westend61/Getty Images/Westend61

Choosing between retirement savings plans can come down to subtle details, especially when weighing a Roth 401(k) vs. traditional 401(k).

Both plans let you save and invest your money as you chart out your family's financial future, but they offer distinctly different tax advantages. In short, you'll pay taxes now with the Roth and you'll pay taxes later with a traditional. The better option depends on your current and future tax strategy.

Comparing these plans could reveal which type will help your money work smarter and harder, now and in retirement.

A traditional 401(k) is funded with pre-tax income

traditional 401(k) is an employer-sponsored, defined contribution retirement plan with many tax advantages.

  • Employees contribute a portion of their pre-tax income to a tax-deferred retirement account.
  • Pre-tax contributions reduce your taxable income in the contribution year.
  • Money invested in a traditional 401(k) grows tax-deferred until you make a qualified withdrawal, and taxes and penalties may apply at that time.
  • Your employer has the option to match contributions up to a certain percentage.

A Roth 401(k) is funded with after-tax income

Roth 401(k) is also an employer-sponsored, defined contribution retirement plan that's funded with post-tax income and has its own tax advantages.

  • Employees pay taxes on contributions in the year money is contributed. Paying the income taxes upfront allows you to enjoy tax-free withdrawals during retirement if certain requirements are met.
  • Money invested in a Roth 401(k) grows tax-deferred until you make a qualified withdrawal, and taxes and penalties may apply at that time. However, if your Roth 401(k) meets requirements to be a qualified distribution, the earnings will be tax-and penalty-free.1
  • With the passage of the SECURE Act 2.0, employers can put matching contributions directly into the employee's Roth 401(k). Previously, these could only go into a tax-deferred account. You must include those matching contributions in your taxable income the year they're received.

5 common questions about traditional & Roth 401(k)s

1. What are the contribution limits for 401(k)s and Roth 401(k)s?

the IRS's annual contribution limit for both traditional 401(k) and Roth 401(k) accounts is:

  • 2023 contribution limit: $22,500 for people younger than 50
  • 2024 contribution limit: $23,000 for people younger than 50
  • Catch-up contribution for age 50 and older: $7,500 can be added to the limit as a catch-up contribution

When combined with employer matching contributions, the limits can go up to:

  • 2023 combined limit: $66,000 for people younger than 50; $73,500 for people 50 or older.
  • 2024 combined limit: $69,000 for people younger than 50; $76,500 for people 50 or older.

2. Can I contribute to both a traditional 401(k) & Roth 401(k)?

Yes. However, in the event you're actively contributing to both a traditional and a Roth 401(k) in the same year, your total annual contributions for the two combined cannot exceed the annual contribution limit.

3. Are there income limits to participate in a traditional & Roth 401(k)?

No, there are no government-imposed income limits for contributing to either a traditional 401(k) or a Roth 401(k). (You may be thinking of Roth IRAs, which do cap contributions based on income.)

4. How do required minimum distributions (RMDs) differ between a traditional & Roth 401(k)?

RMDs are the minimum amount you must withdraw from retirement plans after reaching a specified age. You are required to make RMDs from traditional 401(k) accounts between age 73-75, depending on your birth year.

However, if you're still working at your RMD age and your plan allows it, you may be able to delay taking RMDs. The IRS applies a formula to determine the amount of each annual RMD. Additionally, the IRS requires those who own 5% or more of a company to take RMDs once they turn 73. This age increases to 75 in 2033.

With the changes brought by the SECURE Act 2.0, Roth 401(k) holders aren't required to take RMDs starting in 2024. That means your assets can keep growing in your account tax-free if you don't need them by a certain age.

5. How are traditional 401(k)s & Roth 401(k)s invested?

Employers generally choose the vendor that operates their retirement plans, but you can then usually manage your particular investments from there.

Both traditional and Roth 401(k) accounts often have options to invest in the same kinds of assets, such as:

gold line
Illustration of coin, credit card, and phone displaying financial charts
Are you keeping pace toward your retirement goals?
Our retirement income calculator can help you prepare for the best-laid plans as well as the curveballs.

See how you're tracking

gold line

Choosing between a traditional & Roth 401(k)

The main question to balance when choosing between these accounts is whether you'd prefer to pay taxes when you contribute during your pre-retirement years, or if you'd prefer to pay taxes on your withdrawals in retirement. Your income tax bracket at each phase in life will help to determine the most advantageous move for you.

  • If you expect to be in a lower tax bracket in retirement, then it makes sense to fund a traditional 401(k). Your withdrawals in retirement will be taxed as income, and you will be subject to lower tax payments at that time.
  • If you expect to be in a higher tax bracket in retirement, then it makes sense to fund a Roth 401(k). Your withdrawals will be taxed lowest during the year when you make the contribution, and not taxed upon withdrawal during retirement.

Admittedly, you can't predict the future—and tax laws and family needs can change. Many people find flexibility and freedom in having funds in both types of plans. If you contribute to both, you would have the option to take out Roth 401(k) funds during times of high income and traditional 401(k) funds during times of low income. You may want to work with a financial advisor and tax professional to find out if a mix of funds would provide the most financial security for your family.

Roth 401(k) vs. traditional 401(k) at a glance

Traditional 401(k)
Roth 401(k)
Plan type
Income limits
Paid on contributions and earnings when withdrawals are made
Paid on contributions in the year of contribution; earnings tax-free if IRS requirements are met1
Yes, between age 73-75, depending on your birth year
No, starting in 2024
Employer match contributions
Limits on contributions
Subject to annual IRS limits, including if combined with a Roth 401(k)
Subject to annual IRS limits, including if combined with a traditional 401(k)

Get professional retirement planning guidance

Whether retirement is far off or fast approaching, now’s the time to plan. Deciding whether to contribute to a Roth 401(k), a traditional 401(k) or a blend of both depends on many factors. A Thrivent financial advisor can offer personalized advice and tax-efficient savings strategies to help you achieve your retirement goals.

1 Distributions of earnings are tax free as long as your Roth 401(k) is at least five years old and one of the following requirements is met: (1) you are at least age 59½; (2) you are disabled; (3) you are purchasing your first home ($10,000 lifetime maximum); or (4) the money is being paid to a beneficiary.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

While diversification can help reduce market risk, it does not eliminate it. Diversification does not assure a profit or protect against loss in a declining market.

Investing involves risk, including the possible loss of principal. The fund prospectus contains more information on investment objectives, risks, charges and expenses, which investors should read carefully and consider before investing. Available at