Roth Features
Having the choice between making pre-tax, after-tax or Roth contributions gives you the flexibility to decide how and when you want to pay taxes on your contributions and earnings. With new updates taking effect in 2026, it’s a good time to revisit how Roth contributions may fit into your overall savings approach.
What are Roth contributions?
Unlike contributions to a traditional pre-tax 401(k) account, contributions to a Roth account are after-tax dollars, which means you can withdraw tax-free dollars if you have a qualifying distribution when you retire. A distribution of Roth account balances will be qualified if it occurs five years from the first of the calendar year in which the first Roth contribution was made and one of the following conditions has been met: age 59½, disability, or death.
More information is provided below, including FAQs.
How does Roth compare?
Each contribution type has its own tax advantages and considerations. Review the table below to understand how taxes are handled for each type. You can also watch this video to learn more about the differences between pre-tax and Roth contributions.
| Pre-tax contributions | Roth contributions | After-tax contributions | |
|---|---|---|---|
| How much can I elect to contribute? | You can contribute up to 50% (total, pre-tax, after-tax, and/or Roth) of your Eligible Compensation. | ||
| Is there a limit to how much I can contribute? | The IRS limits your contributions to $24,500 in 2026 (plus $8,000 if you are age 50+ this calendar year, or up to $11,250 if you will be age 60–63). | The total amount both you and Trane Technologies can contribute in 2026 is $72,000 ($80,000 if you’re age 50+, or $83,250 if you're age 60–63). This includes all contributions you and the Company make. | |
| Will I receive the Trane Technologies match? | Yes. Trane Technologies matches a portion of your contributions. However, Catch-up contributions are not eligible for Matching contributions. | ||
| Are contributions taxed? | No, contributions are taken from your paycheck before income taxes. | Yes, contributions are taken from your paycheck after income taxes. | Yes, contributions are taken from your paycheck after income taxes. |
| Are withdrawals taxed?* | Yes, contributions and any earnings are taxed at withdrawal. | No, contributions and any earnings are tax-free at withdrawal.** | Yes and no. Contributions are tax-free at withdrawal, but you’ll pay taxes on any earnings on those contributions when withdrawn. |
*If withdrawals are taken before the age of 59 ½, they may be subject to a 10% early withdrawal additional tax. Employer contributions are made on a pre-tax basis and are taxed at withdrawal.
** For earnings on Roth contributions to be federally tax-free at withdrawal, they must be taken in a qualified distribution, described below.
Watch this video
View this workshop to learn if Roth contributions may be right for you.
What is a qualified distribution?
For earnings on Roth contributions to be federally tax-free at withdrawal, they must be taken in a qualified distribution. A qualified distribution is one that occurs at least five years since the first day of the year of your first Roth 401(k) contribution (or your first in-plan Roth conversion, if earlier) and on or after you attain age 59 ½ or your death or disability.
Roth in-plan conversions
In addition to Roth contributions, you also have the ability to convert pre-tax and after-tax contributions to Roth. This gives you the opportunity to change the tax treatment of your contributions and earnings to help build additional tax-free retirement savings, while helping you manage your taxes both now and in the future.
To make a conversion:
- Call the Trane Technologies Service Center at 1-866-294-7263 to convert your pre-tax or after-tax contributions to Roth. You may also convert vested Company contributions. You can elect a one-time conversion or an automated conversion.
- Each time you convert balances to Roth, you’ll owe taxes on any earnings (and contribution amounts in the case of conversion of pre-tax amounts) prior to the conversion. Automated conversions can convert your balances to Roth on a regular basis and help minimize taxes on earnings.
- Once converted, you can withdraw those converted dollars—including any related earnings—federally tax-free, if you take a qualified distribution in retirement.
- If you elect automated conversions, there is no need for further action unless you wish to discontinue the automated conversions. If you prefer to make one-time conversions, you’ll need to call the Trane Technologies Service Center at 1-866-294-7263 to initiate each conversion.
If you elect to convert after-tax contributions at the time the contribution is made, there will be no additional tax due on that contribution at that time and there may be little or no taxes due on the contribution or earnings when withdrawn if the qualified distribution requirements are met.
How a conversion impacts taxes
If you exceed the annual limit on the amount both you and Trane Technologies can contribute (for 2026, $72,000 plus $8,000 if you are age 50+ this calendar year, or up to $11,250 if you will be age 60–63) and have set up automated conversions of after-tax contributions, you should consider the tax consequences if a distribution of pre-tax or Roth contributions is required.
It’s important to talk to your personal tax advisor before making a Roth in-plan conversion. Since income taxes are not withheld at the time of conversion, you may need to make estimated tax payments to the IRS to avoid underpayment penalties.
In January, you’ll receive a Form 1099-R from Fidelity showing the value of any Roth in-plan conversions made during the prior year. You must report these amounts when you file your taxes and pay any required tax on the taxable amount.
Roth in-plan conversions are irreversible (though you can opt out of future conversions at any time). Before you convert, be sure you understand the tax implications or consult with a trusted tax or financial advisor.
Frequently Asked Questions
Roth and After-Tax Contributions
What are Roth contributions?
You may designate a percentage of your paycheck to be contributed to your 401(k) plan as a Roth contribution. Roth contributions are considered optional and are made on an after-tax basis. Roth accounts were designed to combine the benefits of saving in your tax-deferred 401(k) plan with the advantage of avoiding federal taxes on your money when you make qualified withdrawals in retirement.
How do Roth contributions work?
Think of contributions to your 401(k) plan as having three separate buckets: pre-tax, Roth, and after-tax. When you retire or leave your employer, your Roth contributions and any earnings on those contributions can be withdrawn federally tax free as long as:
- It has been five tax years since your first Roth contribution.
- You are at least 59½ years old.
In the event of your death, beneficiaries may be able to receive distributions tax free if you had started making Roth contributions earlier than five tax years prior to the distribution. In the event of disability, any earnings can be withdrawn tax free if it has been 5 year since the first of the calendar year since your first Roth contribution.
There are limits for Roth contributions. Roth contributions fall under the same IRS limits as pre-tax contributions to your plan. Each dollar of a Roth contribution reduces the amount that can be contributed pre-tax (and vice versa).
- In 2026, the total combined IRS contribution limit for Roth and/or traditional pre-tax contributions is $24,500.
- If you are age 50 or older in the calendar year, you may make an additional “catch-up” contribution of $8,000 in 2026.
- If you will be age 60–63 in 2026, you may make higher catch-up contributions of $11,250.
Important Note: If you are eligible for catch-up contributions and earned more than $150,000 in FICA wages* from Trane Technologies during 2025 and your contribution reach the IRS limit of $24,500, your catch-up contributions must be made on a Roth basis.
* The FICA wage threshold is indexed for inflation and may change each year
What are the similarities and differences between Roth contributions and traditional pre-tax contributions?
Roth contributions are similar to traditional pre-tax contributions in the following ways:
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You elect how much of your salary you wish to contribute.
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Your Roth and traditional pre-tax contributions cannot exceed IRS limits.
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Your contribution is based on your Eligible Compensation.
But, unlike traditional pre-tax contributions, Roth contributions allow you to withdraw your money tax free if you have a qualified distribution when you retire.(1) And income taxes will be withheld from your after-tax Roth contributions, so your take-home pay may be less than it would be if you made an equal traditional pre-tax contribution.
1A distribution from a Roth account is tax free and penalty free, provided that the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, disability, or death.
How are Roth contributions different from regular after-tax contributions?
Regular after-tax contributions are similar to Roth contributions in that both are made after taxes have been paid on your salary. However, there are two key differences:
- Any earnings on regular after-tax contributions are taxable when distributed.
- Regular after-tax contributions are not limited to $24,500. Instead, they are part of the larger $72,000 annual additions limit for 2026, which is the total amount that can be contributed to a 401(k) plan, including employee and employer contributions, and excluding the age 50 catch-up contribution.
Catch-up Contributions + New Roth Requirements
What are catch-up contributions?
Catch-up contributions allow employees age 50 and older to save more for retirement beyond the combined Pre-tax and Roth IRS limit of $24,500. For 2026:
- Standard IRS limit for pre-tax and Roth contributions: $24,500
- Additional catch-up if age 50+: $8,000
- An additional $3,250 catch-up contribution ($11,250 in total) can be made if age 60–63: $11,250 – These extra contributions can help you maximize savings during the years leading up to retirement.
What is SECURE 2.0?
The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act is a federal law enacted in 2022 to improve retirement readiness. It includes provisions to expand access to retirement plans, increase opportunities for individuals to save, and simplify plan administration. It’s intended to strengthen the retirement system and help more people prepare for retirement by providing greater flexibility and helping individuals improve their retirement savings.
What’s changing in 2026 under SECURE 2.0?
If you earned more than $150,000 in FICA wages* from Trane Technologies in 2025, all catch-up contributions must be made on a Roth (after-tax) basis starting January 1, 2026.
* The FICA wage threshold is indexed for inflation and may change each year.
How do I adjust my 401(k) elections?
You can update your 401(k) contribution elections at any time by visiting NetBenefits. You may also call the Trane Technologies Service Center at 1-866-294-7263 to speak with a representative familiar with the 401(k) plan. Benefits representatives are available Monday through Friday (excluding most New York Stock Exchange holidays) from 8:30 a.m. to midnight, Eastern time. Once you make a 401(k) election change, it will take approximately one to two pay periods for the updates to be reflected.
Where can I get additional support on this new requirement?
Call the Trane Technologies Service Center at 1-866-294-7263 to speak with a representative Monday through Friday (excluding most New York Stock Exchange holidays) from 8:30 a.m. to midnight, Eastern time.
Roth In-Plan Conversions
What is a Roth in-plan conversion?
A Roth in-plan conversion allows you to move money you have saved in your 401(k) plan into a designated Roth account within that plan.
A Roth in-plan conversion involves taking a rollover-eligible distribution from your 401(k) plan and directly rolling it over to a Roth account within the same plan. Examples of eligible assets may include your own contributions, employer contributions, or assets rolled in from a former employer.
How do I convert my money to a Roth account within my plan?
Because the conversion of non-Roth money to a Roth account within your plan is a complex decision, all transactions are conducted through Fidelity’s highly trained telephone representatives. If you wish to request a transaction or simply speak with a representative about your options, please call the Trane Technologies Service Center at 1-866-294-7263. The representative will review your account with you and provide you with available options for completing a Roth in-plan conversion. You must call Fidelity to request a Roth in-plan conversion each time you want to convert eligible contributions.
Do I have to pay taxes on after-tax contributions that I convert to a Roth account?
The answer is twofold:
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You do not have to pay taxes on the base contribution, which is deducted from your paycheck after taxes are withheld.
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You do have to pay taxes on any earnings that accrue between the time you make the base contribution and when you convert the contribution and associated earnings to the Roth.
Do I have to pay taxes on pre-tax contributions that I convert to a Roth account?
Yes. You have to pay taxes on both the base contribution, including pre-tax individual and company contributions, and any associated earnings if you convert pre-tax contributions to a Roth account. Company contribution balances cannot be converted to Roth until all vesting requirements have been met.
When am I responsible for paying applicable taxes incurred as a result of a Roth in-plan conversion?
You must pay all applicable taxes incurred as result of a Roth in-plan conversion for the income tax year in which you made the conversion. Taxes incurred as a result of an in-plan conversion are not withheld from your payroll or converted contributions, and you are responsible for the tax liability. It’s important to talk to your personal tax advisor before making a Roth in-plan conversion.
Will I receive a tax form if I move money to a Roth account?
Yes. You will receive an IRS Form 1099-R at the end of the calendar year, which will include consolidated tax information on all your applicable conversions for the year.
What are the benefits of a Roth in-plan conversion?
The following benefits may help you decide whether a Roth in-plan conversion is right for you:
- Roth provides you with additional savings flexibility within your plan. It allows you to diversify your retirement assets between pre-tax and after-tax accounts.
- You can grow tax-free earnings on the Roth portion of your retirement savings, provided you meet appropriate qualification rules.(1)
- Roth can also potentially reduce future income taxes and keep more of what you earn on your investments in your 401(k) plan.
(1) A distribution from a Roth 401(k) is federally tax free and penalty free, provided that the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, disability, or death. Note that while penalty free, earnings on Roth contributions are taxable if you are under age 59½ at the time of distribution.
What should I consider before making my decision to convert?
Please review the following questions to consider before completing a Roth in-plan conversion. The decision to convert needs to be made carefully and should include a consultation with your tax advisor.
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Do you expect to pay higher taxes in the future? If you think that you will be in a higher tax bracket after you retire, or if you plan to leave a substantial amount of your retirement assets to your heirs, you may want to consider a Roth in-plan conversion. This is because you may pay lower taxes now than if you wait until retirement to begin taking taxable withdrawals.
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Do you have a long investment time frame? The relative benefits of a Roth in-plan conversion will increase the longer your money remains in the Roth account. Generally, a Roth in-plan conversion may not make sense if your time horizon is less than five years, as amounts withdrawn may be subject to a 10% penalty.(1)
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Am I able to pay the tax on the applicable Roth in-plan conversion? You will be responsible for taxes owed on the conversion, and you will need to provide for the payment of taxes outside the plan.
(1) A distribution from a qualified retirement plan (other than an IRA) made to you after you separate from service with your employer may be penalty free if the separation occurred in or after the year you reached age 55. Note that while penalty free, earnings on Roth contributions are taxable if you are under age 59½ at the time of distribution.
Where can I get additional information about Roth 401(k) provisions?
Please call the Trane Technologies Service Center at 1-866-294-7263 to speak with a Fidelity representative if you would like additional information on 401(k) Roth provisions. It is also advised that you speak to your personal financial and/or tax provider.
What's Next?
How to Make a Roth in-plan conversion
Call the Trane Technologies Service Center at 1-866-294-7263 for help making a conversion starting in January 2024.
Register or Manage Your Account
Register your 401(k) plan account or make changes to your contribution or investment elections at Fidelity NetBenefits®.
How to Invest Tax-Efficiently
Create an investment strategy to help manage, defer, and reduce federal taxes.