You may elect to contribute 1% to 50% of your eligible base salary, commissions and bonus up to IRS limits every year.
2021 IRS Limits on Pre-Tax or Roth Post-Tax Contributions
You can make pre-tax, Roth post-tax or a combination of contributions. Your combined total contributions cannot exceed annual IRS contribution limits.
When you contribute on a pre-tax basis, you get a tax break when contributions are made, but you will have to pay taxes when you take the money out in retirement. This makes sense if you expect to be in a lower tax bracket when you retire.
The Roth feature means you can contribute post-tax dollars into the plan, so you won’t have to pay taxes on these contributions when you take a qualified distribution.
When you contribute to a traditional 401(k), you’re contributing on a pre-tax basis, meaning you get a tax break upfront but have to pay taxes when you take the money out in retirement. With a Roth account, you contribute post-tax dollars, and the money you contribute, including earnings if you hold the account for at least five years and don’t withdraw the money until at least age 59½, comes out tax-free in retirement.
You may want to take advantage of the Roth feature if you: