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Your 401(k) Journey
Consider after-tax contributions. We’re sharing a secret to save above the 401(k) plan’s contributions limits: consider Roth In-Plan Conversions.
Consider super-sizing your contributions.
After-tax contributions are a great way to boost your 401(k) contributions. Plus, did you know you can convert them to Roth 401(k) using a Roth In-Plan Conversion for potentially greater tax savings benefits? Here are some important things to keep in mind.
How after-tax contributions can be beneficial to your savings.
Different take-home pay.
After-tax contributions come out of your pay after taxes. That means your take-home pay will be less than if you made an equivalent pretax contribution.
Different tax treatment.
You won’t pay taxes when you withdraw after-tax contributions (which, in general, you can do at any time). However, you will owe taxes on any related investment earnings when you withdraw them.
Ability to convert to Roth 401(k).
Through the plan’s Roth In-Plan Conversion feature, you can convert your after-tax contributions into Roth within your Cisco 401(k) account. You will owe taxes on any investment earnings generated before your conversion date, however, any subsequent earnings have the chance to grow tax-free.2
1 In 2023, you can contribute up to the $22,500 limit for pretax and/or Roth 401(k) contributions, or up to $30,000 if you’re 50 or older.
2 In general, Roth distributions are federally tax-free and penalty free when withdrawn at least five years from the first day of the year in which you made your first Roth contribution and after one of the following conditions is met: age 59½; disability; or death.