A Roth 401(k) is an employer-sponsored retirement savings account that allows employees to contribute funds with after-tax dollars. Unlike traditional 401(k) accounts, which are funded with pre-tax dollars, contributions to a Roth 401(k) are made with money that has already been taxed. The key benefit of a Roth 401(k) is that qualified withdrawals made in retirement are tax-free, including both the contributions and any investment earnings. This can provide individuals with tax-free income during their retirement years. Roth 401(k) plans offer employees an additional option for saving for retirement and taking advantage of tax-free growth potential.
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