Roth contributions and voluntary after-tax contributions are both made with after-tax dollars, but they are treated very differently when it comes to growth and taxation.
Key Differences Between Roth and Voluntary After-tax Contributions
|
Feature |
Roth Contributions |
Voluntary After-Tax Contributions |
|
Made with after-tax dollars |
Yes |
Yes |
|
Earning grow tax-free |
Yes |
No (earnings are taxed upon withdrawal) |
|
Withdrawals of earnings tax-free |
Yes, if qualified (age 59 1/2 + 5-year rule) |
No |
|
Available in Ubiquity 401(k) plans |
Yes |
Only available in Single(k) plans |
Voluntary after-tax contributions are only available in Ubiquity's Single(k) (solo 401(k)) plans. If you are not self-employed and sponsoring your own plan, this option does not apply to you.
Benefits of Roth Contributions
- Your contributions are taxed now, but your earnings grow tax-free
- If qualified, your withdrawals in retirement are completely tax-free
- Roth is a great option if you expect to be in a higher tax bracket later
How to Check If Your Plan Allows Roth Contributions
- Log in to your account at myubiquity.com
- Click 401(k) in the left-hand menu
- Select Overview
In the Overview section, you’ll see whether Roth contributions are available in your plan based on your plan’s provisions.
How to Start Making Roth Contributions
- Log in to your Employee Dashboard at myubiquity.com
- Go to 401(k) > Manage Deferral
- Under the Roth Deferral section, enter the percentage or dollar amount you would like withheld after-taxes from each paycheck
- Submit your request
- Check your next pay stub to make sure Roth contributions are being correctly withheld by your payroll provider.
How to Know When Your Roth Contributions Have Been Deposited
Once your Roth contributions are processed and deposited into your account, you'll see a Roth line item under Recent Contributions on your dashboard.
Need Help?
If you have questions about contribution types or eligibility, contact us at info@myubiquity.com.