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Fund a Roth with after-tax account contributions

Your high-earning clients are looking for ways to grow their wealth — and keep it. Help them contribute to an after-tax account within their 401(k) and then use those proceeds to fund a Roth, regardless of their income level.

Overview

Tax laws and rules can change from year to year. That’s why having a pool of retirement income with low to no related tax liability could represent a prudent tax diversification strategy. After-tax accounts within a 401(k) can be a vehicle for setting aside more assets that can grow on a tax-deferred basis. While clients are not getting a tax benefit up front, assets may be more tax-advantaged when distributed in retirement. Additionally, by making after-tax contributions to a 401(k), your clients can potentially build a source of assets for a tax-efficient Roth conversion. This could allow for more flexibility for managing their tax liability in retirement.

 

We've created a program to help your clients tap into the hidden power of after-tax contributions. With our program, you'll learn common defined contribution plan attributes and provisions — as well as lesser known features like after-tax accounts. You’ll also learn how to convert after-tax contributions to a Roth and address important client considerations.

Get Started

Refresh your knowledge and take a deep dive:
Refresh your knowledge and take a deep dive:
  • Understand defined contribution plan attributes and provisions — especially lesser known features like after-tax accounts — using our Ins and Outs Flier (PDF)
  • Learn about funding a Roth with after-tax account contributions — using our After-tax white paper (PDF)
Identify Roth-eligible clients with these questions:
Identify Roth-eligible clients with these questions:
  • Are you currently ineligible to contribute to a Roth IRA due to your income level?
  • Have you maxed out your employee salary deferrals or designated Roth contributions?
  • Are you familiar with after-tax accounts, and does your workplace 401(k) have one as an option?
Gather documents:
Gather documents:
  • Most recent statement from your client’s 401(k) plan
  • Plan documentation, such as a plan document or summary plan description (SPD)
  • Contact information of current/former employers’ plan administrators
Review company plan details:
Review company plan details:
  • Deep dive into your client’s company plan provisions
  • Partner with us for a comprehensive review; together we can map out a strategy for your client's success

Need help?

Contact your partners at Columbia Threadneedle Investments to help you with your clients’ unique situations.

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Disclosures

Columbia Threadneedle Investments and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

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