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With the new roth 401k, how do the deductions calculate? does it take xx% of whats left after your taxes…?
3 Responses to With the new roth 401k, how do the deductions calculate? does it take xx% of whats left after your taxes…?
The $1000. It’s 3% of gross pay for each.
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$30 would be put into the Traditional 401 (k), reducing taxable income to $970. Less your example of $250 taxes you have a net of $720. Then the 3% for the Roth is taken out or $21.60 thus giving you a net paycheck of $698.40.
So to answer directly your XX% is taken out of your after tax amount.
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The contribution to the traditional 401(k) is pre-tax but the contribution to the Roth 401(k) is post-tax. So your tax withholdings will be be on $970.
I hope that answers your question.
Professional tax prep for seven years.
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