For example, you have $1000 gross paycheck - you withold 3% for regular 401k, and 3% for roth 401k to be deducted. Say for example taxes are $250. So, for the regular 401k the employer would withhold $30 ...so after taxes and regualr 401k, the net woudl be $720. Does the Roth 401k calculate based off of the $720, or $750, or $1000?
2006-07-12 02:54:27 · 3 answers · asked by t c 1 in Business & Finance ➔ Taxes ➔ United States
$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.
2006-07-12 03:09:42 · answer #1 · answered by Thrasher 5 · 0⤊ 0⤋
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.
2006-07-12 10:27:31 · answer #2 · answered by frugernity 6 · 0⤊ 0⤋
The $1000. It's 3% of gross pay for each.
2006-07-12 09:58:12 · answer #3 · answered by miketorse 5 · 0⤊ 0⤋