Announcement

Collapse
No announcement yet.

"post tax 401k"

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • #16
    Originally posted by G0ld3n View Post
    But for taxable you’re continually paying taxes on the dividends and distributions, while you don’t pay those if it were in an after tax 401k. Do you still think you end up paying less taxes in the taxable account?
    While obviously dependent on the investments contained in the account, look at the returns of a typical holding in this forum, VTI:
    https://investor.vanguard.com/etf/pr...erformance/vti
    Conveniently VG provides an after-tax return table. They calculate the returns based on the highest tax rates for income and capital gains. Unless you’re in the lowest tax bracket, converting all the returns to income in an after-tax 401k is going to cost you $.

    Comment


    • #17
      wow! thanks that offers the proof I needed to understand the statement that taxable > post-tax 401k! I have since changed my after-tax 401k contributions to 0%.

      Comment


      • #18
        What happens if you have a loss on an in plan after-tax roth conversion in a 401K?

        For example a $5000 after tax contribution that is converted in plan to Roth at $4995?

        I've heard it's a headache dealing with 8606/IRAs/Roth IRAs if you convert a non deductible contribution at a loss, but what happens within a 401K?

        Comment


        • #19
          Originally posted by Tom Kazansky View Post
          What happens if you have a loss on an in plan after-tax roth conversion in a 401K?

          For example a $5000 after tax contribution that is converted in plan to Roth at $4995?

          I've heard it's a headache dealing with 8606/IRAs/Roth IRAs if you convert a non deductible contribution at a loss, but what happens within a 401K?
          it should be maintained as a "basis" similar to what happens with backdoor Roth IRA.

          if you make $5k nondeductible IRA contribution then convert to Roth a few days later at $4995, the $5 loss becomes basis and carries forward (on the 8606). if the next year you contributed $5k then converted a few days later at $5005, the $5 basis would offset the gain and you would owe no tax

          I'm not sure if all 401k plans do this

          Comment


          • #20
            Originally posted by jacoavlu View Post

            it should be maintained as a "basis" similar to what happens with backdoor Roth IRA.

            if you make $5k nondeductible IRA contribution then convert to Roth a few days later at $4995, the $5 loss becomes basis and carries forward (on the 8606). if the next year you contributed $5k then converted a few days later at $5005, the $5 basis would offset the gain and you would owe no tax

            I'm not sure if all 401k plans do this
            Thanks - I do have a small loss in after tax 401k.

            Trying to understand what the consequences would be if converted in-plan.

            Comment


            • #21
              Originally posted by Tom Kazansky View Post

              Thanks - I do have a small loss in after tax 401k.

              Trying to understand what the consequences would be if converted in-plan.
              after tax basis should be maintained. plan administrator may be able to confirm this for you

              Comment

              Working...
              X