What is the difference between a Roth IRA and a Roth 401K? Are the tax implications still the same?
Unlike Roth IRAs, where individuals who earn more than a certain dollar amount aren’t allowed to contribute, you can make Roth contributions, regardless of your salary level, as soon as you’re eligible to participate in the plan. And while a 401(k) plan can require employees to wait up to one year before they become eligible to contribute, many plans allow you to contribute beginning with your first paycheck. There’s an overall cap on your combined pretax and Roth 401(k) contributions. In 2009, you can contribute up to $16,500 of your pay ($22,000 if you’re age 50 or older) to a 401(k) plan. You can split your contribution any way you wish. For example, you can make $9,500 of Roth contributions and $7,000 of pretax 401(k) contributions. It’s up to you. But keep in mind that if you also contribute to another employer’s 401(k), 403(b), SIMPLE, or SAR-SEP plan, your total contributions to all of these plans–both pretax and Roth–can’t exceed $16,500 in 2009 ($22,000 if you’re age 50 or o
