What is a major benefit of investing in a Roth 401(k) account?

Investing in a Roth 401(k) account offers the significant benefit that withdrawals are tax-free after reaching the age of 59 ½, provided certain conditions are met, such as having held the account for at least five years. This is particularly advantageous for individuals who expect to be in a higher tax bracket during retirement than they are currently. By paying taxes on the contributions at the time they are made, individuals can withdraw their money tax-free in retirement, which allows for greater financial flexibility and growth potential over time. This can also lead to a more effective tax strategy, as it can help manage tax liabilities in retirement, especially if other income sources could potentially increase one's taxable income during that time.

The other options do not accurately represent the fundamental characteristics of a Roth 401(k). Contributions are not pre-tax and therefore are not deductible (which applies to traditional 401(k)s), the earnings are not necessarily taxed at a lower rate, and there are income limits applicable to contributions to Roth IRAs, although the employer-sponsored Roth 401(k) does not have the same income limits.