Personal Investments • Why companies don't allow post-tax 401k contribution?

"Yes". In essence, they are effectively the same as "taxable" gains, where the length of the holding will determine if they are "short" (ordinary) or "long" (capital) gains - and thus which taxation rates apply.

I don't think that's true. The wiki says that earnings in the after-tax account are taxed as ordinary income. All the more reason to convert to Roth, of course.

"Yes". In essence, they are effectively the same as "taxable" gains, where the length of the holding will determine if they are "short" (ordinary) or "long" (capital) gains - and thus which taxation rates apply.

This is false the earnings for aftertax in a 401k are like those of nondeductible in an tira and that is ordinary income not capital gains of any type.

Thank you for pointing out my mistake. I've attempted to edit my prior posts to clarify.

I think my original point remains valid though in that the entire benefit of an "after-tax" account is the conversion to Roth, aka the Mega Backdoor Roth. Leaving it in after-tax defeats that purpose... Convert early, convert often!

Correctly stating that there is no lower "long term capital gains" further reenforces that point.

Statistics: Posted by SnowBog — Thu May 30, 2024 2:18 am — Replies 31 — Views 2844

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