Author Topic: Question on Roth 401k Matching  (Read 783 times)

goodenowb1

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Question on Roth 401k Matching
« on: March 23, 2017, 03:12:10 PM »
I'm relatively new in the workforce, and have been contributing to a Roth 401k up to my employer match. My employer matches 50% of contributions up to a 6% contribution. So right now, I contribute $150 of post-tax dollars to the Roth 401k, and my company contributes $75 each pay period.

I had assumed those matching contributions were post-tax dollars, but in researching, find out the company contribution is pre-tax.

My question is: Am I losing out on company matching dollars by contributing to the Roth instead of Traditional 401k? If I contributed pre-tax dollars, say its now $200 instead of $150, my match is $100 instead of $75 right? Essentially my contribution is the same assuming the same tax rates forever, but the employer match is better for the traditional 401k than roth 401k because the $100 and $75 are treated the same tax-wise.

Am I missing something? I've never seen this taken into account, so I must be thinking incorrectly.

Thanks for the responses in advance!

Dezrah

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Re: Question on Roth 401k Matching
« Reply #1 on: March 23, 2017, 05:32:16 PM »
Your employer match is pre-tax* (traditional 401k), regardless of whether your contribution is pre or post-tax. 

We'll always help you where we can, but don't be afraid to ask your HR about the particulars of your plan.  It's their job.

*I say this, but I swear I heard that new IRS rules allow for employers to contribute matches on a post-tax basis.  I can't seem to find it with a quick search though.  I'd be willing to be money that your employer match is pre-tax though.

Proud Foot

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Re: Question on Roth 401k Matching
« Reply #2 on: March 24, 2017, 11:14:10 AM »
No you are not losing out on the match. If you are contributing 6% to your 401k it will be the same amount whether you are contributing to the Traditional or the Roth and the match will be the same as well.  If you are under 6% you may be losing out on some match if contributing to the Traditional will allow you to contribute more due to the tax savings. An example of this would be that maybe you are contributing 5% to the Roth, but would have the same net pay if you did 6% to the Traditional you would be losing out on the matching on that additional 1% contribution.