Roth 401(k) plans offer tax-advantaged retirement savings, but there are income limits that determine who is eligible. For 2023, individuals with incomes below $138,000 per year ($218,000 for married couples filing jointly) can contribute to a Roth 401(k) without any restrictions. However, individuals with incomes above these limits may make reduced contributions or be ineligible to contribute at all. The income limits are indexed to inflation, meaning they increase slightly each year. It’s important to note that these income limits apply to your modified adjusted gross income (MAGI), which may differ from your regular taxable income. If you exceed the income limits, you may still be eligible to contribute to a traditional 401(k) plan, which offers different tax benefits.
Roth 401k Contribution Limits
Unlike traditional 401(k) plans, Roth 401(k) plans offer tax-free growth and tax-free withdrawals in retirement. However, there are income limits on who can contribute to a Roth 401(k) plan.
2023 Contribution Limits
| Filing Status | Limit |
|---|---|
| Single | $22,500 |
| Married Filing Jointly | $30,000 |
| Married Filing Separately | $16,500 |
| Head of Household | $26,500 |
You may also be eligible for a catch-up contribution if you are age 50 or older.
Income Limits
- Single: If your modified adjusted gross income (MAGI) is over $138,000 in 2023, you cannot make Roth 401(k) contributions.
- Married Filing Jointly: If your MAGI is over $218,000 in 2023, you cannot make Roth 401(k) contributions.
- Married Filing Separately: If your MAGI is over $0, you cannot make Roth 401(k) contributions.
- Head of Household: If your MAGI is over $153,000 in 2023, you cannot make Roth 401(k) contributions.
If your MAGI is between these limits, you can make partial Roth 401(k) contributions.
It’s important to monitor your MAGI each year, as the income limits are adjusted annually for inflation. If you exceed the income limits in a given year, you will be subject to a 6% excise tax on any excess Roth 401(k) contributions.
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Income Limits for Roth 401k Contributions
Roth 401(k)s are a popular retirement savings option for many employees. They offer several potential benefits, including tax-free earnings growth and tax-free withdrawals in retirement. However, there are income limits that restrict who can contribute to a Roth 401(k).
Eligibility
- To be eligible for a Roth 401(k), you must meet the following requirements:
- Be under age 50 by the end of the calendar year
- Not be a highly compensated employee
- Meet the income limits
Income Limits
The income limits for Roth 401(k) contributions are updated annually by the IRS. For 2023, the limits are as follows:
| Filing Status | Phase-Out Range | Contribution Limit |
|---|---|---|
| Single | $138,000-$153,000 | $22,500 |
| Married Filing Jointly | $218,000-$228,000 | $22,500 |
| Married Filing Separately (must live apart from spouse for the entire year) | $0-$10,000 | None |
| Head of Household | $153,000-$204,000 | $22,500 |
If your income falls within the phase-out range, your Roth 401(k) contribution limit will be reduced. For example, if you are single and your income is $145,000, your contribution limit would be $18,750 ($22,500 – 50% of the $15,000 difference between your income and the phase-out limit).
Phase-Out Income Ranges for Roth 401k Contributions
Roth 401(k) plans offer tax-free growth and withdrawals in retirement, but they are subject to income limits. If your income exceeds these limits, you may not be able to make full contributions to a Roth 401(k) or may not be eligible at all.
Income Limits for Roth 401(k) Contributions
- 2023 Income Limits:
- Single: $138,000 – $153,000
- Married Filing Jointly: $228,000 – $243,000
- 2024 Income Limits:
- Single: $145,000 – $160,000
- Married Filing Jointly: $235,000 – $250,000
Phase-Out Income Ranges
If your income is within the phase-out ranges, you may be able to make partial Roth 401(k) contributions. The reduced contribution limits for 2023 and 2024 are:
| Income Range | Partial Contribution Limit |
|---|---|
| 2023 Single: $153,000 – $198,000 Married Filing Jointly: $243,000 – $323,000 |
$8,000 |
| 2024 Single: $160,000 – $205,000 Married Filing Jointly: $250,000 – $330,000 |
$7,500 |
And there you have it, folks! The ins and outs of Roth 401k income limits. Whether you’re rolling in dough or just getting by, knowing the rules can help you make the most of this awesome retirement savings tool.
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