Tax FAQ
 

After Tax 401k Deposits & Withdrawls?

Question by k9guy07 | Posted in Investing

I have virtually maxed out my 401k this year. I will continue to put in after tax dollars because of the continued match. What is the sway for withdraw on after tax dollars from a 401k. Are they taxed again?

Answer: If you have made after-tax contributions to your 401k (Deemed IRA), these contributions can be rolled (shortest or indirect) into a Traditional IRA upon plan termination to avoid having to take a distribution.

Delightful a distribution you are subject to the 20% Mandatory Withholding upfront and the additional 10% Early Distribution Penalty when you file for being under age 59 1/2.

If you decide to take a distribution of your after-tax dollars, the only portion of
 
 

Can I Convert A Non Deductible IRA That Has After Tax 401K Funds Into A Roth In 2010 When Income Limits Expire?

Question by bobby B | Posted in United States


Answer: Cherished Bobby: Great question, not many people have thought that far ahead. Why not? Look at IRS Pub 17 call for 124 and it makes clear the procedure to follow when you convert a nondeductible IRA to a Roth. Clearly the $100,000 figure is a hurdle now for you and in 2010 that hurdle will be removed. Make persuaded to retain all documentation related to the origin of the IRA and the tax paid status on the funds. Retain you can keep that Roth going even after you reach age 70 1/2.

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Is The Roth 401k Contribution Limit Pretax Or After Tax?

Question by Bill C | Posted in Investing

I construe the contribution limit for any type of 401k is $16,500 per year. I am wondering if this is on a pretax or after tax constituent for the Roth 401k.

If the limit is after tax, then technically you can contribute significantly more to your account. You would be masterly to contribute $25,385 of your paycheck to your Roth 401k, have it be taxed at 35% to produce it down to $16,500. Is this the case? Or can you only contribute 16,500 of your paycheck?

Answer: Wow MJM's math is totally wrong especially for all those great sources he mentions. Let's try this again.
Roth -
$25,385 - taxes (35% from the interrogate) = $16,500 (approximately) then 4x growth = $66,000 in your pocket
Traditional
$25,385 goes in then 4x advancement = $101,540 - taxes (35%) = $66,000 (approx.)
They come out the exact same. The difference is where will taxes go during this days frame. With a traditional 401k you take on the risk of taxes going

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After Tax 401k Is Better Than ROTH 401k Right?

Question by slickassnot26 | Posted in Personal Finance

I've deliver assign to that both are contributed with after tax money except you can barrow against after tax 401k and pay the money back to yourself. While you can't with the ROTH 401k without there being a price. Also once retirement nears you can rollover a after tax 401k into a ROTH IRA without any fees I believe.
I've announce online that there is a difference between a plain after tax 401k and a ROTH (after tax) 401k. With the plain after tax 401k you can barrow against it for several

 
 

Pre-tax Versus After-tax 401K Question?

Question by Josh | Posted in Personal Finance

My proprietor offers both a pre-tax and after-tax 401K and I can contribute to either or both in any % combination. They match $ for $ up to 6%. I understand the basics of pre-tax vs after tax savings, but the after-tax schema sounds so much better to me, since I'll be paying a lot less in taxes in the long run. Other than reducing my take-home pay now, can anyone untangle justify to me where the pre-tax option has other benefits? I am 26, so I have quite a few years of saving left. Any wise

Answer: The rejoin for most people depends on what they expect their income tax rate to be at distribution. If you are in a relatively low tax shelf today, then Roth may make sense for you. However, if you think your tax rate will be lower when you put one's feet up (either because you will earn less income when you retire or as a resuly of a general reduction in the tax rates), then away your contributions pre-tax.

The thing about the long run is that, given the option, most people would

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Social(k) Smarts: Roth option in 401(k). Higher ...

Thumbnail outline of Roth IRA compared to Roth option in 401(k). The big difference is a higher contribution limit into the Roth 401(k) account ...

The Slott Report: IRA Funds in Real Estate Highlights Slott Report ...

by admin

They range from prohibited transactions, when you use special funds to pay the authentic rank expenses or take services for the genuine belongings beyond that of an investment conclusion, and investment gains resulting from investments that may design... Discusses the odds of using IRA funds to provide in true housing, regulation on using Proper after-tax dollars for a Roth IRA conversion and a employment involving inherited IRAs. You will call to prove a self directed IRA with a custodian that will assign genuine land as an investment. I would like to recall more about using IRA funds to sink in verifiable resources. What are the guidelines for using an IRA account to inaugurate in valid holdings. Genuine domain is a permitted investment in IRAs. While physical landed estate is a OK investment, not all custodians will brook it to be held in the account....

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