Many Americans are woefully unprepared for retirement. An estimated 20% of those 50 and over have nothing saved for retirement at all, reports AARP.

But if you don’t manage to build up a retirement nest egg, you may reach a point where you have only Social Security to live on. And that could lead to a stressful retirement — one that has you counting every last dollar.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Now when it comes to funding your retirement savings, there are different accounts you can choose from. But here’s why you may want to focus on a Roth 401(k) this year.

1. You can contribute more than an IRA

Employer-sponsored 401(k)s have long offered more generous contribution limits than IRAs. And this year, savers get even more leeway to sock funds away for retirement.

Savers under age 50 can contribute up to $23,500 to a Roth 401(k) this year (or a traditional one, for that matter), while those 50 and over get a $7,500 catch-up that raises that limit to $31,000. IRAs, by contrast, max out at $7,000 for savers under 50 and $8,000 for those 50 and over.

But this year especially, there’s extra incentive for older workers to save in a Roth 401(k). That’s because people between ages 60 and 63 are eligible for a super catch-up contribution of $11,250.

That $11,250 isn’t in addition to the normal $7,500 catch-up — it’s instead of it. But still, that gives savers aged 60 to 63 the option to put up to $34,740 into a Roth 401(k) this year.

2. There are no income limits to worry about

Roth retirement plans offer the benefit of both tax-free investment gains and withdrawals. But Roth IRAs have income limits that make it harder for higher earners to contribute.

This year, if you’re single and earn $165,000 or more, you can’t fund a Roth IRA directly. The same holds true if you’re a married couple filing jointly earning $246,000 or more.

With a Roth 401(k), there are no income limits to concern yourself with. As long as your employer’s plan has a Roth savings option, which many 401(k)s do these days, you can contribute.

3. You won’t have to worry about what tax rates look like in the future

The nice thing about Roth retirement accounts is that they allow you to effectively lock in your current tax rate on your contributions and withdrawals. Since there’s no tax on withdrawals, the two are one and the same.

Why is that important? Today’s tax rates are lower than they’ve been in the past. And we don’t know what tax rates will look like in the future.

But we can’t discount the possibility of tax rates going up — a lot. With a Roth 401(k), you don’t have to worry about what future tax rates look like — at least within the context of that specific account.

All told, there’s lots to love about Roth 401(k)s. And you may want to consider funding one this year, especially if you’re old enough to take advantage of the new super catch-up provision.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.