My work 401k allows AFTER TAX contribution and I want to know who is eligible of doing that?
Do I need to meet below requirements in order to do so?
1. Gross income exceed the contribution limit for Roth IRA (example: $240K for married couple)
2. Have max out the 401K contribution limit of $23000 or $305000 if older than 50.
I read a few places saying the above but not everywhere. And I can't find the answer from IRS site. And, my work 401k let me know do so even I do not meet the above two points. I want to know if I am violating the tax rule. Please hep.
Thanks in advance.
The 401k contribution rules have nothing to do with IRAs, they are controlled by completely separate laws and rules.
For 2024, you can contribute up to $23,000 to a 401k by salary deferral, or $30,500 if you are age 50 or over. The maximum total contribution to a 401k, including employer match, is $69,000.
If your employer offers a designated Roth option within the 401k, the same limits apply. However, any employer match must be contributed to a traditional pre-tax 401k account.
Whether you can also make Roth IRA contributions, or make deductible contributions to a pre-tax IRA, depends on your filing status, income, and participation in a workplace place, and the limits are here.
Question: if I have not yet maxed out my 401k contribution, is it okay to contribute to 401k AFTER TAX portion?
The reason I am doing this is that my company match is only for 401k contribution but not for catch up contribution. If I max out my regular 401k contribution, I will lose some of company matching.
@DatBio wrote:
Question: if I have not yet maxed out my 401k contribution, is it okay to contribute to 401k AFTER TAX portion?
The reason I am doing this is that my company match is only for 401k contribution but not for catch up contribution. If I max out my regular 401k contribution, I will lose some of company matching.
You can contribute a maximum of $23,000 per year by salary deferral (or $30,500 if over age 50). It doesn't matter whether you contribute to a pre-tax 401k account, a designated Roth 401k account, or a combination.