Originally Posted by APC225

It will not, if I understand it correctly. One also has to consider their tax bracket. Vacation is ordinary income and as such is taxed in a bracket for most of us well more than 16%. While the loss of the 16% match is significant, there is in fact a net gain when you consider that RHA directed vacation pay bypasses taxation at a 25% or higher rate.

For instance $10k worth of vacation would put $1600 into PRAP but cost $2500 or more in taxes for a net loss compared to $10k into RHA that doesn’t get the 16% match but bypasses 25+% taxation. Additionally, RHA funds are tax free coming out while PRAP funds are not. The $1600 gets taxed again later upon distribution from the pretax account. RHA does not.

There are certainly compelling reasons not to sell vacation, but a net loss of money is not one of them if I understand it correctly.