After Tax 401(k) contribution

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Topic Author
Goblue10
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Joined: Sun Dec 30, 2012 12:39 am

After Tax 401(k) contribution

Post by Goblue10 »

Hello,
What is the total 401(k) contribution limit for 2013 including pre-tax, after-tax, and company match? In other words, how much can I legally put in my 401(k) this year?
Thanks!
CJ
NYBoglehead
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Re: After Tax 401(k) contribution

Post by NYBoglehead »

$17,500 is you are under 50.

That number is for all 401k contributions, in any mix of Roth and Traditional.
THY4373
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Re: After Tax 401(k) contribution

Post by THY4373 »

NYBoglehead wrote:$17,500 is you are under 50.

That number is for all 401k contributions, in any mix of Roth and Traditional.
The answer is a little more complicated than that depending on what OP means by "after-tax". You are correct that pre-tax traditional and after-tax Roth contributions are limited to 17,500 for the under 50 set (over 50 add $5,500). However the limits for after tax (non-Roth) contributions to your traditional 401k balance (similar to a non-deductible traditional IRA contribution) are higher. Not all plans allow non-Roth after tax contributions but if yours does the total assuming you are under 50 is pre-tax traditional/Roth contributions (limited to 17,500) + employer contributions + employee non-Roth after tax contributions = 51,000 for 2013. Over 50 can raise the 17,500 limit by 5,500. I have been making non-Roth post tax contributions for the last couple of years.

More info here: http://www.irs.gov/uac/2013-Pension-Plan-Limitations
Topic Author
Goblue10
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Re: After Tax 401(k) contribution

Post by Goblue10 »

I had heard that 51k number before so just wanted to confirm and Thank you.

A follow-up question, is that 51k limited to 401k. In other words, can I make a 5k non-deductible IRA contribution as well?
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BolderBoy
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Re: After Tax 401(k) contribution

Post by BolderBoy »

Goblue10 wrote:I had heard that 51k number before so just wanted to confirm and Thank you.

A follow-up question, is that 51k limited to 401k. In other words, can I make a 5k non-deductible IRA contribution as well?
Make sure your particular 401k plan allows for after-tax contributions...
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SSSS
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Re: After Tax 401(k) contribution

Post by SSSS »

Goblue10 wrote:I had heard that 51k number before so just wanted to confirm and Thank you.

A follow-up question, is that 51k limited to 401k. In other words, can I make a 5k non-deductible IRA contribution as well?
Yes. You can do $51,000 to your 401k and $5,500 to your IRA, for a total of $56,500.

Keep in mind that matching funds from your employer count towards the $51,000.
Topic Author
Goblue10
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Re: After Tax 401(k) contribution

Post by Goblue10 »

Thanks all! Yes, my employer offers the after-tax option.
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retiredjg
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Re: After Tax 401(k) contribution

Post by retiredjg »

Don't forget your catch up amounts of $1k for IRA and $5,500 for 401k/403b/etc. I know the IRA catch up is added on and I think the catch up for 401k is over and above the 51k. If that applies to you, you'd probably want to look that one up some where.
Default User BR
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Re: After Tax 401(k) contribution

Post by Default User BR »

retiredjg wrote:Don't forget your catch up amounts of $1k for IRA and $5,500 for 401k/403b/etc. I know the IRA catch up is added on and I think the catch up for 401k is over and above the 51k. If that applies to you, you'd probably want to look that one up some where.
Correct, catch-up contributions are not including when calculating the "415(c)" limit.


Brian
slowlrnr
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Re: After Tax 401(k) contribution

Post by slowlrnr »

BolderBoy wrote: Make sure your particular 401k plan allows for after-tax contributions...
Is the "after-tax contribution 401k" same as "Roth 401k"? I was told by my employer that limit is 17,500 combined for both.
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retiredjg
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Re: After Tax 401(k) contribution

Post by retiredjg »

slowlrnr wrote:
BolderBoy wrote: Make sure your particular 401k plan allows for after-tax contributions...
Is the "after-tax contribution 401k" same as "Roth 401k"? I was told by my employer that limit is 17,500 combined for both.
No. After-tax employee contributions are NOT the same as Roth 401k. The limit for "elective deferrals" is $17,500 and that includes tax-deferred and designated Roth contributions - just as your employer said.

Not all plans allow after-tax employee contributions. It's kind of a complex subject. Watch for more threads on the subject and you'll figure it out.
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BolderBoy
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Re: After Tax 401(k) contribution

Post by BolderBoy »

Pretty sure that "after-tax" is NOT the same as Roth 401k. You put "after-tax" contributions into the traditional 401k, so the earnings on it would be taxable down the road.

Sort of like making non-deductible contribs to a tIRA...
slowlrnr
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Re: After Tax 401(k) contribution

Post by slowlrnr »

retiredjg wrote: No. After-tax employee contributions are NOT the same as Roth 401k. The limit for "elective deferrals" is $17,500 and that includes tax-deferred and designated Roth contributions - just as your employer said.
Not all plans allow after-tax employee contributions. It's kind of a complex subject. Watch for more threads on the subject and you'll figure it out.
BolderBoy wrote:Pretty sure that "after-tax" is NOT the same as Roth 401k. You put "after-tax" contributions into the traditional 401k, so the earnings on it would be taxable down the road.
Sort of like making non-deductible contribs to a tIRA...
Thank you very much, Retired JG and Bolder Boy.
Default User BR
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Re: After Tax 401(k) contribution

Post by Default User BR »

retiredjg wrote:No. After-tax employee contributions are NOT the same as Roth 401k.
I frequently use the cumbersome, "after-tax non-Roth contributions."


Brian
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BHCadet
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Re: After Tax 401(k) contribution

Post by BHCadet »

After I max out on the $17,000 pre-tax and $5,000 catch up contributions last year (2012), I continued contributing several thousands more as after-tax contribution.
My employer doesn't offer the Roth 401K option.
Otherwise, I would have backdoor the after-tax contributions to Roth.
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tfb
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Re: After Tax 401(k) contribution

Post by tfb »

BHCadet wrote:My employer doesn't offer the Roth 401K option. Otherwise, I would have backdoor the after-tax contributions to Roth.
Likely you can still do that to a Roth IRA. Inquire about in-service distribution of the after-tax contributions.
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retiredjg
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Re: After Tax 401(k) contribution

Post by retiredjg »

BHCadet wrote:Otherwise, I would have backdoor the after-tax contributions to Roth.
I'm a little confused about what you mean here. Do you mean you cannot do an in-service rollover of your after-tax funds to Roth IRA? If not, it's possible you should not be making after-tax contributions to your 401k. Putting the money in taxable might be better.

Or maybe you mean you would have put that money into Roth IRA instead, using the backdoor contribution method.
Default User BR
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Re: After Tax 401(k) contribution

Post by Default User BR »

tfb wrote:
BHCadet wrote:My employer doesn't offer the Roth 401K option. Otherwise, I would have backdoor the after-tax contributions to Roth.
Likely you can still do that to a Roth IRA. Inquire about in-service distribution of the after-tax contributions.
Yep. Unless your 401(k) has stellar selections, this is usually the best idea anyway.


Brian
mweston912
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Re: After Tax 401(k) contribution

Post by mweston912 »

You could still do the "backdoor" roth option. Your employer does not need to offer a roth option for this. It would be best to do it from a personal non-deductible ira rather than a 401k due to the difficulty of withdrawing money from a qualified plan while still employed.
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