Printer Friendly
Dictionary, Encyclopedia and Thesaurus - The Free Dictionary
3,892,568,208 visitors served.
forum Join the Word of the Day Mailing List For webmasters
?
Dictionary/
thesaurus
Medical
dictionary
Legal
dictionary
Financial
dictionary
Acronyms
 
Idioms
Encyclopedia
Wikipedia
encyclopedia
?

After-Tax Contribution

    0.01 sec.
After-Tax Contribution
A contribution made to a retirement plan with money one has left over after paying taxes. That is, when one makes after-tax contributions to a retirement plan, one has already paid taxes on the contribution. As a result, one does not pay taxes on the withdrawals on the plan made after retirement. After tax contributions are made on Roth IRAs and Roth 401(k)s. See also: Pre-Tax Contributions.

After-tax contribution. An after-tax contribution is money you put into your 401(k) or other employer sponsored retirement savings plan either instead of or in addition to your pretax contribution.

You make an after-tax contribution if you've chosen to participate in a Roth 401(k) or similar tax-free plan rather than a traditional tax-deferred 401(k).

However, if you make excess deferrals, any earnings on the after-tax amount accumulate tax deferred. The disadvantage is that figuring the tax that's due on your required distributions may be more complicated than if you had made only pretax contributions.



Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content.
?Page tools
Printer friendly
Cite / link
Feedback
Add definition
Mentioned in?  References in periodicals archive?   Financial browser?   Full browser?
 
Employees who make (or who have made) after-tax contributions to their employer's retirement plan, listen up.
Individuals will be able decide to make before-tax contributions that will be fully subject to tax on withdrawal, or after-tax contributions that will be non-taxable on withdrawal.
Also, the article should have indicated that after-tax contributions to a 401(k) plan can be recovered tax-free first only if contributed before 1987 and separately accounted for by the employer.
 
 
 
Financial Dictionary
?

Terms of Use | Privacy policy | Feedback | Advertise with Us | Copyright © 2012 Farlex, Inc.
Disclaimer
All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.