After-Tax Contributions

For taxable years beginning on or after January 1, 2007, PPA removes the restriction that required the receiving plan to be of the same type as the distributing plan. Plans eligible to receive after-tax assets, plan permitting, are governmental 457(b) plans, IRC Secs. 401(a) (including solo 401k plans for the self-employed), 403(a), and 403(b) plans, and IRAs. While individuals must directly roll over after-tax assets between eligible retirement plans, they can indirectly roll over after-tax assets from retirement plans to IRAs.

Some 401(k) plans including solo 401k plans may allow employees to make additional contributions to the plan on an after-tax or nondeductible basis. All earnings on such contributions are tax-deferred. The plan documents will specify whether this option is available to participants.  As a solo 401k provider, My Solo 401k Financial offers a solo 401k plan that allows for after-tax contributions.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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