Roth 401(k)

Offer your employees another way to save by adding a Roth option to your company’s 401(k)


A Roth option for your 401(k) plan allows you and your employees to contribute post-tax earnings toward retirement—and face no additional taxes on those savings or any investment earnings when the money is withdrawn during retirement.

Adding a Roth option is a cost-effective way to make your company-sponsored 401(k) plan more attractive because a Roth option benefits two constituents at your company:

  1. The business owner(s) and other highly-compensated employees who make too much money to contribute to a Roth IRA. With a Roth 401(k), there is no income cap (sometimes referred to as a “phase out”) for contributing to a Roth 401(k). Adding a Roth means owners will have a new tax diversification strategy.
  2. Younger employees who have a long time before they retire. Younger employees may also pay a lower tax rate now than they will further in their careers (or during retirement).
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Watch this video for answers to frequently asked questions about Roth 401(k)

Your Money Minute video features one of our Retirement Counselors discussing when a Roth 401(k) is right for participants.

Watch our Roth 401(k) Video

ADVANTAGES OF ROTH 401(K) FOR you and your business

Roth 401(k) accounts help attract employees—particularly Millennials and high-earners. 

Adding a Roth 401(k) costs very little, as you’re simply adding a feature to your existing company 401(k). Depending on your contracts with your other service providers, it may be free. 

ADVANTAGES for you and your Employees

  • Adding a Roth option allows participants to save into two accounts with different tax benefits.
  • If permitted by the plan, older employees can use the money in their Roth 401(k) toward purchasing a house, tax- and penalty-free. It's not a loan, either, so no money needs to be paid back.
  • Retirement withdrawals from Roth accounts are not included in an individual’s Adjusted Gross Income algorithm during retirement. This algorithm determines whether certain government subsidies, such as a healthcare subsidy, will be available during retirement. 
  • Roth 401(k) accounts have higher maximum contributions limits than Roth IRAs$19,500 versus $6,000 for workers under age 50 in 2021.



Contributing to a Roth 401(k) is similar to contributing to a traditional 401(k), with one distinct difference: Employees make contributions to their Roth accounts after they’ve already paid taxes on that money, whereas traditional 401(k) contributions are made pre-tax. 


There are some special requirements for a Roth 401(k), mostly surrounding the different method of taxation that they utilize. If you are a Fisher Investments 401(k) Solutions client, your Retirement Counselor can coordinate with the parties necessary to get a Roth option added to your company 401(k) plan. 

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Fisher Investments 401(k) Solutions is committed to bringing unparalleled support to small and mid-size businesses and their employees through 401(k) retirement plan services.

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