After-tax contribution

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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.

References in periodicals archive ?
Though quickly converting non-Roth after-tax contributions into a Roth can minimize taxable earnings, it is still possible that some additional tax liability may result if the account has generated earnings between contribution and conversion.
69-277 provides that a pension plan may permit distribution of the employee's after-tax contributions before employment termination.
In general, the 401(k) funds will be eligible if they are employer-matching and profit-sharing contributions, employee after-tax contributions to a traditional 401(k), or pre-tax employee and Roth contributions once the client reaches age 591/2.
The plan did not permit after-tax contributions or other additions that would not be included in gross income if distributed to the employee.
If the plan allows for after-tax contributions, those contributions will be subject to the general ACP testing requirements, whether or not the plan is otherwise treated as meeting the safe harbor for matching contributions.
Any such repayments are treated as after-tax contributions for tax purposes, not treated as after-tax contributions for other purposes, such as actual contribution percentage testing under Sec.
The law firm's health plan involved stop-loss insurance and required after-tax contributions by employees.
USERRA specifically gives a reemployed veteran the opportunity to make after-tax contributions and elective contributions for periods of military service, over a period of at least three times the length of the absence, not to exceed five years.
This release leaves unclear the treatment of welfare plans in which employee after-tax contributions are accepted and sent to a third-party administrator in an administrative-services-only (ASO) situation, and self-funded plans in which the benefit payments always exceed the after-tax employee contributions.