Retirement The Roth feature can help investors of all ages build retirement savings

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October 19, 2026
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Whether you're just starting your career or approaching retirement, the Roth feature1 in a retirement account offers unique attributes to help future financial planning. Unlike traditional pre-tax retirement accounts, Roth contributions are made with after-tax dollars, allowing principal and investment earnings to be withdrawn tax-free when a qualifying event occurs. This flexibility makes the Roth option appealing across generations.

Benefits of the Roth feature

  • Tax-free earnings growth: Rather than taking a tax deduction now, contributions are made with money that has already been taxed. This allows for tax-free withdrawal of principal and potential earnings when eligibility requirements are met.2
  • Strategic tax planning: Roth accounts provide tax diversification, helping manage taxable income in retirement. If you're contributing to an employer-sponsored retirement plan where your employer makes matching or other contributions, those contributions are typically made on a pre-tax basis. This means, when withdrawals are made from those funds in retirement, they will be subject to income tax also — potentially increasing your taxable income during those years.
  • No mandatory distributions: Unlike traditional pre-tax contributions, required minimum distributions (RMDs) are not required at age 73 in Roth accounts, allowing individuals more control over the timing of those withdrawals.
  • Estate planning advantages: Roth accounts can be passed on with minimal tax impact. Rules vary depending on the type of Roth account and the relationship of the beneficiary to the decedent.
  • For all ages: Anyone with earned income can defer all or a portion of their retirement contributions as Roth. Younger investors benefit from decades of tax-free growth; older investors can use Roth conversions to manage RMDs. Refer to the chart for contribution maximums.

Expanded savings potential with Roth contributions in employer plans 

Roth contributions in employer-sponsored retirement plans provide a valuable opportunity to save for retirement on an after-tax basis. Unlike Roth IRAs, employer-sponsored Roth accounts are not subject to income eligibility restrictions and generally offer higher contribution limits. 

Beginning in 2026: Participants who participate in a qualified retirement plan and earned more than $150,000 in Federal Insurance Contribution Act (FICA) wages during the previous year and wish to make catch-up contributions will be required to make those catch-up contributions on a Roth basis. To accommodate these contributions, the plan must offer a Roth feature.

2026 Participant contribution maximums by age³

Plan TypeContribution up to age 49Catch-up contribution at age 504+Special catch-up contribution between ages 60 to 641,5,6Income requirements
Solo 401(k)6 $24,500 $8,000 $11,250No 
403(b)6 $24,500 $8,000 $11,250No 
SIMPLE IRA 25 or less employees7 $18,100 $4,000 $5,250No 
SIMPLE IRA 26 or more employees7 $17,000 $4,000 $5,250No 
Roth IRA8 $7,500 $1,100N/AYes

Distribution highlights

  • No RMDs: No mandatory distributions required at age 73.
  • Tax-free distribution: Any earnings accumulated are eligible for tax-free distribution if the first contribution was made at least five years prior to distribution and the account owner is either age 59½ or older, disabled, or the distribution is due to death.
  • Early withdrawals: Generally subject to a 10% penalty if taken before age 59½, unless exceptions apply (e.g., disability, first-time home purchase for Roth IRA, etc.). Withdrawals from a SIMPLE IRA may incur a 25% penalties if the account is less than two years old, whereas principal contributions to a Roth IRA can be withdrawn at any time without penalty.

Final Thoughts

While Roth contributions to an employer-sponsored plan are only permitted if the employer elects the Roth feature, individuals can access Roth on their own through an IRA. From tax-free earnings to distribution flexibility, it can be a strategic allocation for building a resilient retirement plan.

Whether you're contributing to a Roth IRA or electing employee Roth contributions in a 401(k) like the Invesco Solo 401(k), 403(b), or SIMPLE IRA (effective for the 1/1/2026 plan year), understanding how these features work can help you make informed financial decisions, making it a powerful benefit for investors at every stage of life.

To learn more, see our retirement solutions offerings and speak with your financial professional.

  • 1

    This is an optional plan feature, that must be elected by the employer.
  • 2

    Roth IRA accounts are eligible for tax-free distribution of earnings 5 years after the first contribution and the account owner is at least age 59 ½, deceased or disabled. 
  • 3

    Maximum contribution amounts are the lesser of the amounts shown or 100% of income.
  • 4

    Contributions may begin January 1 of the year of turning age 50.
  • 5

    Enhanced contribution limits are permitted for participants aged 60–63; however, implementation of this provision is optional for employers. Please consult your Plan Administrator to determine whether your plan includes this feature. Once a participant turns age 64, they revert (back) to the age 50 catch-up contribution limit in effect for that year.
  • 6

    Participants age 50+ who earned $150,000 or more in prior-year FICA wages must make catch-up contributions on a Roth basis, if the plan offers a Roth feature.
  • 7

    Employers with 25 or fewer employees are required to permit increased employee salary deferral limits. Employers with 26 to 100 employees may choose to allow these higher deferral limits.
  • 8

    Roth IRA contributions are subject to income eligibility and marital status.

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