Originally Posted by
Probe
I made the mistake of putting a lot of mine in the PRAP last year. I found out after that it doesn't go in completely "before tax". I don't remember the details, but it is a different category of income, and is treated different under tax law.
So if you put it in your PRAP, you will still get taxed, and will fill up your limit with "POST" tax money instead of pre-tax money. Seems to me the wrong way to go.
I wish the union would have advised us of this. I cost me a few thou of tax.
I want to avoid this so I'm trying to understand it. I understand the tax part of it. Certain deductions still come out, and when they do they are no longer pre tax sheltered, and therefore taxed as income. But I don’t understand how any of it can go in post tax PRAP unless that’s election box is marked. If someone elects 100% to go in pretax, and that would exceed the IRS max allowed, shouldn’t the rest just kick out directly to you via direct deposit or check?