Roth accounts are after-tax accounts with unique benefits for retirement savers.

Namely, investments grow tax-free, and withdrawals aren’t subject to tax during one’s retirement years. But there are some key differences between Roth savings in a 401(k) plan and in an individual retirement account.

Here are some of the biggest.

IRAs and 401(k) plans carry annual savings limits. However, investors can stash away more money in a Roth 401(k) relative to a Roth IRA.  

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Savers can contribute up to $6,000 to a Roth IRA in 2021. (This limit is a total for all Roth and traditional IRAs.) Those age 50 and older can save an extra $1,000, or $7,000 total.

Roth 401(k) savers can stash away up to $19,500 in 2021. Those age 50 and older can save an additional $6,500 — for a total $26,000.

Not everyone can save in a Roth IRA. Investors are ineligible if their annual income exceeds a certain level.

By comparison, Roth 401(k) plans don’t have any such income limits. (Some workers may not have a Roth 401(k) option available to them, though.)

In 2021, single taxpayers may contribute the maximum amount to a Roth IRA if their income is less than $125,000. They can’t contribute at all once their income is $140,000 or more.

(Married couples who file a joint tax return can contribute the maximum amount if their income is less than $198,000; they can no longer contribute beyond $208,000.)

Regardless of income, workers can roll Roth 401(k) savings to a Roth IRA when they change jobs or retire.

Roth IRAs don’t carry annual required minimum distributions for their owners. As a result, savers don’t need to withdraw money from the accounts during their lifetimes. (Their heirs do, however.)

Roth 401(k) accounts do require distributions starting at age 72, like savers in traditional, pre-tax retirement accounts. Unlike withdrawals from pre-tax accounts, Roth distributions after age 59½ are tax-free.