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.

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References in periodicals archive

Making an after-tax contribution to a traditional IRA that's already funded with pre-tax contributions will result in a pro-rata tax bill on the pre-tax assets subject to conversion.

Money Management: Sneaking in the backdoor

Under Notice 2014-54, high-income wage earners who can afford an after-tax contribution can roll over their after-tax contributions every year to a Roth IRA, so long as their employers' plans allow for an in-service distribution.

IRA Planning at Every Age

Using two examples, the CCA discusses a plan in which an employer offers all employees enrollment in a self-funded health plan, for which the employees pay a small, after-tax contribution to participate.

Wellness program benefits: Tax free or not?

The Roth IRA after-tax contribution limit for 2010 is $5,000, plus a catch-up contribution of $1,000 for those who have attained age 50 or higher.

Financial focus

Results for the fiscal 2004 quarter included a negative impact of $50 million from the southern California labor strike as well as a $5 million after-tax contribution to two union multiemployer health and welfare plans in northern California.

Albertsons 'clarifying endgame'

Therefore, the after-tax contribution feature of the Roth would allow an individual to save more money toward retirement, other things being equal.

The Roth versus the Traditional IRA: an annual decision

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