If you’ve opted into your employer’s 401(k) Roth match this year, it could trigger a tax surprise, experts say. Here’s what to know.
If you've opted into your employer's matching 401 Roth contributions this year, it could trigger a tax surprise, experts say.
Your employer's Roth match will be extra income for tax purposes and levies aren't automatically withheld.in Roth accounts. These accounts are after-tax, meaning employees pay upfront taxes but growth and withdrawals in retirement are tax-free. Previously Roth 401 matches went into pre-tax accounts. Roughly 12% of employers with 401 plans said they are"definitely" adding the feature and 37% are"still considering it," according to a recent survey from the Plan Sponsor Council of America.However, those new matching Roth contributions could have"unintended consequences" at tax time, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
For example, if you expect to incur $1,320 more in federal taxes, you could divide that amount by your remaining 2024 paychecks and include that"extra withholding" on"In either case, working with a trusted tax advisor would help to optimize overall tax planning and eventual tax reporting for the year," Guarino added.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
How your 401(k) ate the federal budgetGreased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the deficit and add to income inequality.
Read more »
How to save for retirement if your company doesn't offer a 401(k)Not every employer offers a 401(k) retirement account, but there are suitable alternatives.
Read more »
How to save for retirement if your company doesn't offer a 401(k)Not every employer offers a 401(k) retirement account, but there are suitable alternatives.
Read more »
IMPALA Stands With UMG on TikTok ‘Value Gap’ and Flags ‘Unintended Consequences’ With Streaming ChangesIMPALA released a statement detailing its position on UMG and TikTok, and the proposed changes to the payment models for music streaming.
Read more »
The Unintended Consequences of Cutting Greenhouse Gas EmissionsCutting greenhouse gas emissions leads to a reduction in planet-cooling aerosols, resulting in less reflective pollution and additional warming.
Read more »
The ripple effect of organ donation: An unintended but welcome friendship and a new familyTwo women are celebrating a 10-year friendship that they admit has helped save them both.
Read more »