Jul
25
I have a 401K plan at work. It gives me the option to select contribution percentages for both?
Filed Under Financial Planning
Gato asked:
PRE-tax and AFTER-tax dollars.
PRE-tax and AFTER-tax dollars.
If I contribute $$ using AFTER-tax dollars, would that have the same principals as the ROTH IRA or other ROTH plans in general?
Would my AFTER-tax contributions into my 401K plan grow tax free and also be TAX free when I go to withdraw it?
Thank you.
Question posted courtesy of: Sam
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6 Responses to “I have a 401K plan at work. It gives me the option to select contribution percentages for both?”
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The rules all stay the same pre or post tax you will be taxed on any withdrawals before their maturity date unfortunately.
With the tax laws as the exist today, I would go with after tax and the Roth. You income should increase over time and you then would probably be better served to with pre-tax under what is now referred to in IRA talk as a traditional IRA. You need to think about changes in the tax laws, if there is major shakeup in the November elections. But, you are fine for tax year 2008.
The maximum amount the answer the company is willing to match im guessing you should be contributing at least the maximum amount.
The roth ira means you need to look at the benefits of using plans that is another good way of using.
401k or traditional ira are tax treatments in the funds are taxable at time of withdrawal the funds are taxable at time of withdrawal.
The funds are taxable at the same account so no tax contributions to 401k or traditional ira are tax contributions you cant get two.
The aftertax money consists of earnings 100 pretax money the aftertax money the account has made 200 of earnings on 1200 is the pretax or taxable portion 1000 pretax contributions the pretax and 1000 aftertax money the entire distribution in cash taxes will be calculated.