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An after-tax 401(k) may sound like it’s a Roth 401(k), which also uses after-tax money, but don’t confuse the two. The Roth 401(k) offers different tax advantages. The Roth 401(k) offers ...
Beginning in the 2006 tax year, employees have been allowed to designate contributions as a Roth 401(k) deferral. Similar to the provisions of a Roth IRA, these contributions are made on an after-tax basis. For accumulated after-tax contributions and earnings in a designated Roth account (Roth 401(k)), "qualified distributions" can be made tax ...
Your employer may allow you to make after-tax 401(k) contributions. These are not tax-deductible like your regular 401(k) contributions, but you can make after-tax deferrals beyond the annual 401 ...
In other cases, pre-tax deductions only delay your tax obligations — 401(k) contributions, for example, are taxed when you begin making withdrawals in retirement later down the road.
Beginning in 2006, 403(b) and 401(k) plans may also include designated Roth contributions, i.e., after-tax contributions, which will allow tax-free withdrawals if certain requirements are met. Primarily, the designated Roth contributions have to be in the plan for at least five taxable years and you have to be at least 59 years of age.
The so-called Roth 401(k)/403(b) is a new tax-qualified employer-sponsored retirement plan to become effective in 2006, and would offer tax treatment in a retirement plan similar to that offered to account holders of Roth IRAs. For plan sponsors, the law requires involuntary cash-out distributions of 401(k) accounts into a default IRA.
Any 401(k) withdrawal that occurs before age 59 1/2, however, may be subject to an additional tax and a 10 percent penalty. Roth 401(k): Contributions are made with after-tax dollars, meaning you ...
A Roth 401(k) is funded with post-tax money, unlike a traditional 401(k) made with pre-tax contributions. For a Roth 401(k), you can withdraw money without penalty or taxes if you’re at least ...