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Are Roth and Pre-Tax 401(k) Contributions the Same?

August 31, 2014 by John Park Leave a Comment

Yes, as it relates to elective employee deferrals (e.g., your personal contributions into the plan).  In short, yes, employee elective deferrals, whether made in a Traditional or Roth manner (of a combination thereof) will have the same elective deferral limitations.

But, it is important to keep in mind that the “same” contribution limits only apply to elective deferrals.  Obviously, rollover contributions, pre-tax contributions and the business’ profit share contributions (if any), must be placed within separate accounts for the plan.  In short, only your Roth contributions and the gains from those invested funds will be in the Roth contribution account.

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About John Park

John

As co-founder of Fulcrum Self-Directed, John Park believes in the power of self-directed plans tempered by the individual responsibility to operate the plan in compliance with IRS and DOL regulations. As such, Fulcrum Self-Directed is in a unique position to assist a client in establishing an IRS compliance self-directed plan, while guiding clients with their responsibility to operate and administer their plan.

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