For many plans, offering the after-tax contribution
option simply presents an administrative burden that the plan sponsor is unwilling to assume.
* New Roth 401(k) Rollovers Maximize After-Tax Contribution
While the non-Roth after-tax contribution
option offered wealthy clients a way to increase their 401(k) account values in the past, it did little to mitigate the current or future tax bite.
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.
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.
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
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.
In contrast, assume the investment vehicle is one where the return is fully currently taxable and where PV is an after-tax contribution
. In this case, no portion of the return is attributable to appreciation or is tax deferred, so g and b are set to 0, and ar then equals r x (1 - [t.sub.f])f.
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.
Therefore, the after-tax contribution
feature of the Roth would allow an individual to save more money toward retirement, other things being equal.
The numerator of the fraction, which may be called the employee's investment, represented the retiree's after-tax contribution
to the plan.
Split 401(k) rollovers maximize after-tax contribution