The phrase “after tax contributions” as it pertains to retirement accounts can often be a bit confusing. This article will discuss some of the common aspects of after tax contributions.
You might find it easier to understand the phrase if you think of after tax contributions as being voluntary contributions. These are contributions that you deposit into a retirement account or annuity after you have paid the required state and federal taxes on it.
Conversely, before tax contributions are those funds that you put into an account that have not been subject to taxes. When this money is withdrawn later on you will have to pay that tax at that time.
Generally speaking, most people prefer after tax contributions because when they withdraw the money they will not be taxed again. There is some belief (and perhaps rightly) that taxes only go up as time passes by, and that if they wait to pay the tax on their contributions later the tax will be higher.
Another important issue between the two is that if you take money out of a before tax account that amount of money will be added to your stated annual income for that year. In other words, if you...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
