PRE-tax and AFTER-tax dollars.
If I contribute $$ using AFTER-tax dollars, would that have duplicate principals as the ROTH IRA or other ROTH plans in nonspecific?
Would my AFTER-tax contributions into my 401K plan grow tax free and also be TAX free when I progress to withdraw it?
Thank you.
Answers: No. Any AFTER charge contributions to a 401k or traditional IRA are taxable at time of withdrawal alike as pre-tax contributions. You can't get two different due treatments in like account. The benefit is that dividends and possessions gains distributions are duty exempt while the funds are still in the statement. So no tax bill at the come to an end of the year.
No. After-tax contributions are not the same as Roth contributions.
If you contribute both pre-tax and after-tax money, you will be assessed taxes on the "pre-tax" and "company match" money. The pre-tax money consists of pre-tax contributions, yield on the pre-tax and after-tax contributions, and company contributions. The after-tax contributions contributed can be withdrawn without self taxed again.
Example: You contribute $1000 pre-tax and $1000 after-tax. The justification has made $200 within earnings ($100 pre-tax, $100 after-tax). If you help yourself to the entire distribution in brass, taxes will be calculated on $1200 dollars. $1200 is the "pre-tax" or taxable portion ($1000 pre-tax contributions + 200 of earnings which own not yet be taxed).
the ROTH IRA means you don't repay taxes when you withdraw your money, but you don't clutch a deduction. Usually the cap determine whether or not you will be taxed when you cancel. You ought to look at the benefits of using plans that will let you draw duty free but no present deduction or present estimate but no tax free draw. Most those are broke when they retire or pretty close and a 0-5% savings on tariff really doesn't do much for them. You need to ask the administrator what the plan does for you, and be indisputable your money is not invested in the company, to be exact another good mode of losing your savings. Amost every single plan does allow for import tax free investment growth, but the same is not for withdrawal upon retirement. With the tax law as the exist today, I would go beside after tax and the Roth. You income should increase over time and you afterwards would probably be better served to with pre-tax below what is now referred to contained by IRA talk as a traditional IRA. You stipulation to think going on for changes within the tax law, if there is principal shakeup in the November elections. But, you are fine for rates year 2008.
I don't know, but I am interested in the answer. The solitary tidbit of info I do have is that contained by most cases you should be contributing at least the maximum amount the company is prepared to match. I'm guessing you already know that. yes the rules all stay indistinguishable pre or post tax you aRE ALLOWED ONLY A CERTAIN AMOUNT TO CONTRIBUTE YEARLY I BELIEVE IT IS 4,000 YEARLY BUT MAY HAVE INCREASED AND YOU WILL BE TAXED ON ANY WITHDRAWALS BEFORE THEIR MATURITY DATE (UNFORTUNATELY)
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If I contribute $$ using AFTER-tax dollars, would that have duplicate principals as the ROTH IRA or other ROTH plans in nonspecific?
Would my AFTER-tax contributions into my 401K plan grow tax free and also be TAX free when I progress to withdraw it?
Thank you.
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Answers: No. Any AFTER charge contributions to a 401k or traditional IRA are taxable at time of withdrawal alike as pre-tax contributions. You can't get two different due treatments in like account. The benefit is that dividends and possessions gains distributions are duty exempt while the funds are still in the statement. So no tax bill at the come to an end of the year.
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No. After-tax contributions are not the same as Roth contributions.
If you contribute both pre-tax and after-tax money, you will be assessed taxes on the "pre-tax" and "company match" money. The pre-tax money consists of pre-tax contributions, yield on the pre-tax and after-tax contributions, and company contributions. The after-tax contributions contributed can be withdrawn without self taxed again.
Example: You contribute $1000 pre-tax and $1000 after-tax. The justification has made $200 within earnings ($100 pre-tax, $100 after-tax). If you help yourself to the entire distribution in brass, taxes will be calculated on $1200 dollars. $1200 is the "pre-tax" or taxable portion ($1000 pre-tax contributions + 200 of earnings which own not yet be taxed).
the ROTH IRA means you don't repay taxes when you withdraw your money, but you don't clutch a deduction. Usually the cap determine whether or not you will be taxed when you cancel. You ought to look at the benefits of using plans that will let you draw duty free but no present deduction or present estimate but no tax free draw. Most those are broke when they retire or pretty close and a 0-5% savings on tariff really doesn't do much for them. You need to ask the administrator what the plan does for you, and be indisputable your money is not invested in the company, to be exact another good mode of losing your savings. Amost every single plan does allow for import tax free investment growth, but the same is not for withdrawal upon retirement. With the tax law as the exist today, I would go beside after tax and the Roth. You income should increase over time and you afterwards would probably be better served to with pre-tax below what is now referred to contained by IRA talk as a traditional IRA. You stipulation to think going on for changes within the tax law, if there is principal shakeup in the November elections. But, you are fine for rates year 2008.
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I don't know, but I am interested in the answer. The solitary tidbit of info I do have is that contained by most cases you should be contributing at least the maximum amount the company is prepared to match. I'm guessing you already know that. yes the rules all stay indistinguishable pre or post tax you aRE ALLOWED ONLY A CERTAIN AMOUNT TO CONTRIBUTE YEARLY I BELIEVE IT IS 4,000 YEARLY BUT MAY HAVE INCREASED AND YOU WILL BE TAXED ON ANY WITHDRAWALS BEFORE THEIR MATURITY DATE (UNFORTUNATELY)
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