Roth 401(k) on a Pay Stub: 2026 Taxes, W-2 Codes, and Limits

A Roth 401(k) deduction reduces the cash you take home, but it does not reduce wages subject to federal income tax. A traditional 401(k) employee deferral usually does reduce those federal wages. Both kinds of employee deferral generally remain in Social Security and Medicare wages. Those three effects are why a Roth 401(k) on a pay stub can look puzzling even when payroll is correct.

This is a U.S. employee-payroll guide for 2026, focused on a 401(k) plan that offers both traditional and designated Roth employee deferrals. The worked examples assume ordinary covered wages below the Social Security wage cap, no other benefit exclusions or taxable fringe items, no tips, no corrections, and no employer Roth match. Your plan terms and state tax rules can change other parts of the statement.

What the Roth line means

A designated Roth 401(k) contribution is an employee election to direct part of current pay into a separate Roth account within an employer plan. Payroll may abbreviate the line as “Roth 401(k),” “401K ROTH,” or something similar; labels are not standardized. The IRS designated-Roth FAQ says the elected amount is included in gross income when it would otherwise have been paid as cash. “After-tax” describes that wage treatment. It is still a deduction from the cash payment.

A traditional pre-tax employee deferral is also withheld from cash pay, but normally is excluded from current federal income-tax wages. The IRS retirement-contribution withholding table confirms that both the traditional and Roth salary deferrals remain subject to Social Security and Medicare. The tax treatment of a qualified Roth distribution later in life is different from the treatment of the paycheck contribution; the IRS Roth-account overview explains the five-tax-year and age, disability, or death conditions for qualified distributions.

Do not mistake the word “Roth” for a separate payroll tax. It identifies where retirement savings are directed. Likewise, a Roth 401(k) is not the same account as a personal Roth IRA or a voluntary non-Roth after-tax contribution. Ask for the plan election and account record if the deduction label is ambiguous.

Check one pay period with both elections

Imagine an employee with $3,420.00 in otherwise taxable covered wages on one 2026 paycheck. They elected a $170.00 traditional 401(k) deferral and a $130.00 Roth 401(k) deferral. No other item changes taxable wages.

Start with gross covered wages, then build each tax base separately. Federal income-tax wages are $3,420.00 − $170.00 = $3,250.00. The $130 Roth contribution stays inside that $3,250.00; it is not subtracted a second time. Social Security and regular Medicare wages each remain $3,420.00 under these assumptions. This wage-base distinction is also reflected in the 2026 W-2 instructions.

For this ordinary employee, the 2026 Social Security rate of 6.2% gives $212.04 of employee Social Security tax on $3,420.00; the 1.45% regular Medicare rate gives $49.59. The Social Security base is annual and can cap out later. See the Social Security wage-cap guide and Medicare-tax guide for those separate checks. The rates come from IRS Topic 751.

Some pay statements display a single “taxable wages” figure without saying which tax it belongs to. In that case, ask payroll for the federal-income-tax, Social Security, and Medicare wage bases rather than assuming gross pay, W-2 Box 1, and net pay must match.

Why does the Roth contribution change take-home pay?

Both elected amounts leave this paycheck: the employee saves $300.00, made up of $170.00 traditional plus $130.00 Roth. “After-tax” does not mean the Roth contribution is merely shown as information or paid by the employer. It means that the $130.00 remains included when federal income-tax wages are calculated.

A simplified cash equation is gross cash wages − employee retirement deferrals − taxes actually withheld − other cash deductions + any nontaxable cash reimbursements = amount paid. Do not subtract the traditional deferral twice: first use it to identify the income-tax wage base, then subtract it once from cash pay. The amount of federal income tax withheld still depends on the employee's Form W-4, pay frequency, other taxable pay, and payroll method. The tax-base difference alone cannot tell you the exact change in take-home pay between traditional and Roth elections.

For the fictional check, removing the two retirement deferrals and the two stated FICA deductions leaves $2,858.37 before federal and state income-tax withholding and all other cash items: $3,420.00 − $170.00 − $130.00 − $212.04 − $49.59. This is a subtotal, not the employee's final net pay. Our gross-pay versus taxable-wages article explains other benefit and wage-base differences.

How the deductions should appear on the 2026 W-2

Now assume exactly 26 equal payments like the example occur during calendar year 2026, with no bonuses, omitted checks, corrections, other compensation, tips, or benefit adjustments. This is an illustration of year-end reconciliation, not a promise that every biweekly schedule has 26 payment dates.

Total covered gross wages would be $3,420.00 × 26 = $88,920.00. The traditional employee deferrals total $170.00 × 26 = $4,420.00; Roth employee deferrals total $130.00 × 26 = $3,380.00. The combined employee deferral is $7,800.00.

Under those assumptions, W-2 Box 1 federal wages would be $84,500.00 ($88,920.00 less the $4,420.00 traditional amount). Box 3 Social Security wages and Box 5 Medicare wages would each be $88,920.00; this example remains below the 2026 Social Security wage base. The IRS's 2026 W-2 instructions assign Box 12 code D to the traditional 401(k) deferral and Box 12 code AA to the designated Roth 401(k) employee contribution. A retirement-plan indicator also normally appears in Box 13.

Code AA's $3,380.00 is already included in Box 1 here. Subtracting it from Box 1 again would understate federal wages. Box 12 is useful for checking the retirement election and its annual amount; it is not a list of additional cash wages. If Box 1, Box 3, and Box 5 differ for other reasons, compare the plan and benefit records before treating this simple example as a universal W-2 formula. The W-2 reconciliation guide covers broader timing and benefit adjustments.

One 2026 employee limit covers both choices

For an ordinary traditional or safe-harbor 401(k), the IRS's 2026 employee-deferral limit is $24,500 before catch-up contributions. The employee may split that allowance between traditional and Roth designations, but does not receive $24,500 for each. The fictional $7,800 yearly total is $16,700 below the basic limit. That arithmetic is a limit check, not an instruction to increase contributions.

The higher ceilings require eligibility and plan permission; a plan can also impose a lower election limit. The IRS says employee elective deferrals generally must be considered across plans, so a second job's separate payroll system may not know what was deferred at the first. Employer matching contributions use a different overall annual-additions framework and do not consume this employee elective-deferral limit. SIMPLE 401(k) plans have different figures; do not apply this table to one. The linked IRS limits page explains those distinctions.

The 2026 Roth catch-up rule is narrower than “all high earners must use Roth”

According to the IRS catch-up guidance, beginning in 2026 certain catch-up-eligible participants with more than $150,000 in applicable prior-year wages from the plan sponsor must make their catch-up contributions on a Roth basis where the plan offers catch-up and Roth features. The test concerns the relevant 2025 wages for 2026 contributions, not this paycheck's gross pay. It does not by itself require the employee's regular contributions within the $24,500 basic limit to be Roth.

For a clear hypothetical, suppose a worker turns 55 in 2026, had $165,000 in relevant 2025 wages from the sponsoring employer, and is eligible to contribute $25,500 in 2026. Assuming no lower plan or testing limit, the first $24,500 may still follow the employee's permitted traditional/Roth election; the $1,000 catch-up portion generally needs Roth designation under the 2026 rule. Ask the plan administrator how this applies after a transfer, related-employer change, or different wage history. The IRS final regulations describe special details and distinguish their generally later regulatory applicability date from the statutory 2026 Roth catch-up start.

Do not confuse the employee line with an employer match

If the company contributes a match, that contribution can appear in an informational “employer” section of the pay statement or in the retirement-plan portal. It generally is not a second deduction from the employee's cash pay. The match formula, vesting, timing, and destination depend on the plan. A match calculated from a Roth employee election does not prove the employer match itself is Roth.

Some plans can allow an employee to designate certain employer matching or nonelective contributions as Roth. That is a separate option under SECURE 2.0, not the same item as the employee's Box 12 code AA deferral. The IRS reporting explanation says designated Roth employer amounts are generally taxable to the employee but reported on Form 1099-R for the allocation year, rather than as the ordinary employee Roth deduction on Form W-2. Confirm how the employer plan handles them before trying to fit every match into the simplified paycheck example.

What to ask when the figures look wrong

1. Confirm the election. Ask for the plan record showing the current traditional and Roth percentages or amounts, and the pay date when a change took effect.
2. Compare cash and wage bases separately. Both elected deferrals should lower the employee's cash payment. Only the traditional amount usually lowers current federal income-tax wages under this guide's assumptions. Both remain in FICA wages while subject to those taxes.
3. Check employer money separately. Identify any employer match as employer funding, not an unexplained employee deduction.
4. Check year-to-date and annual fields. Compare deduction totals to the plan portal and later to W-2 codes D and AA. Include deferrals at other employers when checking the employee limit.
5. Ask for a documented correction. If the election type, effective date, cash deduction, or W-2 code is wrong, ask payroll or the plan administrator for the correction record and any corrected W-2 when applicable.

For this example, a useful payroll question is: “My $3,420.00 covered paycheck has $170.00 traditional and $130.00 Roth 401(k) deductions. With no other wage adjustments, I expect $3,250.00 federal income-tax wages and $3,420.00 Social Security and Medicare wages. Which recorded election or benefit explains a different amount?”

Check the current-year rules and the actual plan documents before preparing or revising a pay statement. A generated statement should reflect the verified payroll and retirement-plan records, including the correct 401(k) deduction type.

U.S. federal payroll rules and linked IRS guidance reviewed September 29, 2026. The examples are fictional and do not calculate a complete personal tax return or a guaranteed net paycheck.