Edward Karas, as well as agreed to refund pretax contributions
of $100,631.14 he made to the fund over the course of 13 years with the village public safety department.
However, it may be possible to pay the tax on those pretax contributions
at today's tax rates and move the dollars over to the Roth version, if the paperwork allows such in-plan Roth conversions.
The wellness plan provides typical wellness program benefits; however, the plan also provides substantial incentives that, in essence, reimburse the employee's pretax contributions
for the wellness plan.
I would be totally against it," said Reynolds, referring to Washington talk about replacing the current system of pretax contributions
to 401(k) plans with aftertax contributions, as in Roth retirement savings plan.
The combination of pretax contributions
and tax-deferred growth creates the opportunity to build an impressive retirement fund with a 403(b) plan, depending on investment performance.
Employees do not have to choose 100% Roth contributions or 100% pretax contributions
. As long as combined deferrals do not exceed the annual contribution limit, employees can designate any portion of their earnings to their designated Roth account and the remaining portion to their traditional pretax retirement account.
* 401(k) allows employees to make pretax contributions
: matching employer contributions are allowed but not mandatory.
A plan sponsor can now offer a Roth feature allowing participants to convert all plan assets, including employer and employee pretax contributions
and earnings, to Roth savings.
Most plans allow pretax contributions
and tax-deferred account earnings.
The pretax contributions
and earnings in the 401 (k) plan are not a factor because the after- tax contributions and their earnings are considered held under a separate contract.
Communications concentrate on plan basics such as how the plan works, the advantages of pretax contributions
, tax-deferred compounding, starting early, contributing regularly and how to invest plan contributions to reach retirement goals.