Tuesday, November 28, 2017
A few years ago, the IRS released regulations easing the tax burden on after-tax contributions in a retirement account. Many clients don’t understand the rules governing after-tax contributions and may equate this contribution option with the Roth option. The tax rules are quite different and its important advisors be able to explain the differences.
Differentiating the Contribution Options
While almost all clients realize they have the ability to defer up to the traditional annual pre-tax contribution limit to a 401(k) plan ($18,000 in 2017, or $24,000 for clients age 50 and over) and up to the individual limit to IRAs and Roth IRAs ($5,500 or $6,500 with the catch-up), many don’t truly understand how the after-tax contribution comes into play.
read the analysis on ThinkAdvisor
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