"When I first learned about Roth IRAs and Roth 401(k) plans-the tax-advantaged retirement plans that are funded with a taxpayer's after-tax income-I remember thinking that it must be nice to have enough income that you could afford to contribute money to your retirement without an immediate tax break. But even though you fund Roth accounts with after-tax dollars, making them more expensive on the contribution side, they are ultimately a savvy way to save money in the long run."
"Named for Delaware Senator William V. Roth (and not, as I originally believed, for Van Halen frontman David Lee Roth), these accounts were designed to give you a tax break in retirement, rather than when you make contributions. Although Roth accounts were originally restricted to IRAs, Roth 401(k) plans became available through workplace retirement accounts as of January 1, 2006."
Roth IRAs and Roth 401(k) plans are funded with after-tax income and provide tax-free qualified withdrawals in retirement. Roth IRAs were created in 1997 by the Taxpayer Relief Act and named for Senator William V. Roth. Roth 401(k) options became available to workplace plans on January 1, 2006, and by 2023 about 93% of workplace retirement plans offered a Roth 401(k). Roth accounts have income and contribution limits that can change annually. 2025 limits list Roth IRA phaseout maximum incomes of $150,000 single and $236,000 married filing jointly, and contribution limits for IRAs and 401(k)s as specified.
Read at Fast Company
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