Roth IRA contributions are taxed (although the individual's contribution may still qualify for the Saver's Credit) but the assets in the account grow tax-free and qualified distributions are not taxed. IRA contribution limits are set by the IRS, whereas 401(k) limits are set by the employer.401(k) contributions are taken from an employee's paychecks on a pre-tax basis, which means that payroll taxes aren't paid on them. Roth 401(k) contributions are taxable but qualified distributions are not.oth IRA contributions are taxed (although the individual's contribution may still qualify for the Saver's Credit) but the assets in the account grow tax-free and qualified distributions are not taxed. IRA contribution limits are set by the IRS, whereas 401(k) limits are set by the employer.