Roth 401(k) business definition

An employer-sponsored savings plan in which employees have income withheld from their paycheck for contribution to a retirement account. Unlike a regular 401(k), a Roth 401(k) requires that taxes be paid upfront on income contributed to the account. Tax benefits are transferred to the distribution period, when withdrawals of contributions and investment income are tax-free, assuming qualifications regarding age and plan length are satisfied. Any matching employer contributions are maintained in a separate account and subject to taxation upon withdrawal.