Originally Posted by
Extenda
but if it’s after tax isn’t it just the same as investing your own post-tax money in whatever you want? What’s the benefit of putting after tax money into a 401k?
There’s a couple advantages. First, it immediately rolls into the 401K, and is essentially identical to Roth contributions, with the same benefits. 2nd, you can race the company to the annual contribution limit, minimizing the pre-tax dollars they manage to put in before you hit the limit. That makes almost the entire retirement account a Roth if one so chooses, and obviously the value can be pretty high if this strategy is started early.
This only works for companies that offer “automatic in-plan conversion” and cash over cap.