Contribution Limits

• Roth 401(k) plan contribution limits are cumulative with traditional 401(k) plans. The maximum contribution is adjusted each year depending on changes in the cost of living. For 2010, the maximum Roth 401(k) contribution for people younger than 50 is $16,500. If you are 50 or older, you can contribute $22,000. However, money that you contribute to your traditional 401(k) plan reduces your maximum Roth 401(k) contribution. For example, if in 2010 you 49 and you contribute $6,500 to a traditional 401(k) plan, you could contribute only $10,000 to your Roth 401(k).
  
  

Eligibility Requirements

• To contribute to a Roth 401(k), you must have earned income equal to or greater than your contribution. In addition, you must work for an employer that offers a Roth 401(k) plan; you cannot start a Roth 401(k) plan on your own. However, the Internal Revenue Service does not impose income limits that keep high earners from participating in a Roth 401(k), although it does with Roth IRAs.
  
  

Matching Contributions

• Employers are allowed to match contributions to Roth 401(k) plans. However, the matching money from the employer cannot be added to the Roth 401(k) plan. Instead, it must be contributed to a separate traditional 401(k) plan. When you withdraw money from the matching contributions at retirement, that money will be taxable. However, you do not have to include the amount of matching contributions as taxable income in the year the contributions are made on your behalf.
  
  

Withdrawals

• Qualified withdrawals from a Roth 401(k) plan cannot be made until you reach age 59 1/2 years old and the account has been open for five tax years. The age of the 401(k) account in tax years is counted from the first day of the tax year a contribution was made. For example, if you first contributed to the Roth 401(k) in July 2009, the age of the account would be counted from Jan. 1, 2009. If you become permanently disabled, or if you die and your heirs wish to withdraw money from the Roth 401(k), you do not have to be 59 1/2 for the withdrawal to be qualified.
  
  

Time Frame for Distributions

• You cannot leave money in the Roth 401(k) plan indefinitely. Starting when you reach age 70 1/2, you must start taking required minimum distributions from your Roth 401(k) plan, based on your age and the size of the account. The age at which you must start taking these required distributions can be pushed back only if you are still working at 70 1/2 for a company in which you have less than 5 percent ownership.