If you're planning to max out your 401(k) plan for 2023 and want to save more, you may consider after-tax 401(k) contributions. Here's what you need to know.
However, some plans offer additional after-tax contributions to your traditional 401, which allows you to save more than the $22,500 cap. For example, if you defer $22,500 and your employer kicks in $8,000 for matches and profit-sharing, you may save another $35,500 before hitting the $66,000 plan limit for 2023.
In 2021, roughly 21% of company plans offered after-tax 401 contributions, compared to about 20% of plans in 2020, the survey found. And almost 42% of employers of 5,000 or more provided the option in 2021, up from about 38% in 2020. "It's a nice way to go ahead and start boosting that tax-free money for those future years," said Lawrence.
However, "there's a fair number of professionals — from CPAs, attorneys, wealth managers and financial planners — who don't understand or are not familiar with in-plan Roth [401] rollovers," he said.
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