After-Tax Retirement Plan Contributions

Roy S. Gilbert

February 13, 2026

Most retirement savers are probably aware that they may save for retirement in tax-deferred employer-sponsored accounts such as 401(k)s, 403(b)s and SIMPLE IRAs and on their own in traditional IRAs. Most retirement savers are probably also aware that in tax-deferred accounts, potential income tax liability on earnings in these accounts may be deferred until such time as funds are withdrawn from them¹.

In the usual case, pre-tax contributions are made to these types of retirement accounts. This means that in addition to income tax being deferred on the earnings in the account, income tax is also deferred on the earned compensation that is contributed to the account¹.

However, some may not be as familiar with the ability to make after-tax or non-deductible contributions to retirement accounts. Pre-tax contribution rules differ from after-tax contribution rules and the rules for IRAs are different from those for 401(k) accounts. These rules differences may impact contributions, account access and taxes.

An additional subject to define up front is the ROTH IRA and ROTH 401(k). A Roth IRA is an IRA funded with after tax dollars. Those funds can grow and may be withdrawn tax-free (not simply tax-deferred) after age 59½ if the account has been opened for at least 5 years³. A Roth 401(k) is an employer sponsored retirement plan funded with after tax dollars similar to the Roth IRA and funds may also be withdrawn tax-free after age 59½ if the account has been opened for at least 5 years⁴.

INDIVIDUAL RETIREMENT ACCOUNT LIMITS

The rules regarding contributions to IRA accounts can get complicated. The 2026 contribution limit is $8,600, including a $1,100 age 50 and over catch-up contribution (or some lower amount if your 2026 earnings were lower). This contribution limit is the combined limit for all traditional IRA contributions in 2026 including ROTH contributions¹⁶.

The amount you may contribute to an after-tax Roth IRA and the amount of your tax-deductible (pre-tax) IRA contributions may be further impacted by your income, your spouse’s income and the participation of either or both of you in an employer sponsored retirement plan. Whether a Roth IRA is better than a traditional pre-tax IRA is largely an individua tax question⁵:

If you believe your future retirement tax rate will be lower than your current one, pre-tax IRA contributions can permit currently deductible IRA contributions with future withdrawals taxed at the lower future tax rates.
If you believe your current tax rate is lower than your future tax rate will be, you may pay tax now and make the after-tax Roth contributions which may be accessed tax-free in the future when you believe your tax rate will be higher.

In addition to the traditional pre-tax and after-tax Roth IRAs, contributions can be made to after-tax (non-deductible) traditional IRA accounts. A non-deductible traditional IRA may be considered where income and other retirement plans create barriers to funding a Roth IRA or a deductible traditional IRA account⁶.

It is important to make sure that non-deductible IRA contributions are reported on Form 8606⁷ and that you keep copies of these forms to create a paper trail of your non-deductible contributions. Many tax preparers may not maintain copies of tax returns for long periods of time. Without adequate records that tax has already been paid on contributed funds, you might end up paying tax twice on the same dollars – once when originally contributed and once when withdrawn.

401(k) ACCOUNT LIMITS

The maximum 401(k) elective deferral contribution from compensation for 2026 is $24,500 in addition to an age 50 and over maximum $8,000 catch-up contribution. For those contributing between ages 60-63 a super catch up of $11,250 may be available to those whose plans allow it. Similar to the IRA discussion above, it may be possible to make three different types of contributions to 401(k) plans¹⁶:

Some or all of the above contribution limit may be made pre-tax.
Some or all of the above contribution limit may made as a Roth contribution if your 401(k) plan allows for Roth contributions.
Generally, after you have maxed out on the contribution limits noted above, non-deductible (after-tax) contributions may be made if your 401(k) plan allows for non-Roth after-tax contributions.

In addition to contributions to your 401(k), your employer may also make matching or non-elective profit-sharing contributions. The total that may be contributed to a 401(k) from all sources in 2026 including the age 50 and over catch-up amount is $80,000².

NON-ROTH AFTER TAX CONTRIBUTIONS

Roth IRA and Roth 401(k) contributions may generally be preferable to non-Roth after tax IRA and 401(k) contributions. Non-Roth contributions may not provide the same opportunity for tax-advantaged access to funds in the future; they may merely provide continued tax-deferral to the growth and earnings on the funds until they are withdrawn.

After-tax (non-deductible) 401(k) contributions.

After-tax 401(k) contributions could be considered after the total maximum of $24,500 has been contributed in 2026 and after the employer has made its contribution for the year – such as a matching contribution – to achieve the maximum $80,000 (including an $8,000 catch-up contribution for those 50 and over) for 2026².

These after-tax contributions may be valuable especially where the 401(k) plan does not provide a designated Roth account. As mentioned above, the 401(k) plan may permit the addition of after-tax contributions.

Where available, after-tax 401(k) contributions could be beneficial to those with high incomes to save more for retirement with - some potential tax-advantage due to the deferral of tax on account increases in value and account earnings. In addition, there are no income restrictions as there are with Roth IRA contributions. Even though the earnings on the account may become taxable on withdrawal and possibly subject to penalty if withdrawn prior to age 59½, the contributions themselves may be accessed without penalty or tax⁸.

A Roth account might be an ideal endpoint for after-tax 401(k) contributions.

Where the 401(k) plan allows for a Roth account and for in-plan conversions, you might be able to convert these after-tax funds to a Roth account with the payment of the taxes on any earnings⁸.
If there is no 401(k) Roth provision and the 401(k) plan allows for in-service distributions, it may be possible to roll after-tax 401(k) contributions into to a Roth IRA outside the 401(k) plan⁹. This strategy is sometimes referred to as a Mega Roth⁹.
However, you may not be able to take a distribution of only the after-tax amounts in your plan to roll into a Roth IRA. The distribution may have to include a proportional amount of pre-tax funds which could be rolled into a pre-tax traditional IRA¹⁰.

After-tax (non-deductible) IRA contributions

Just as with after non-deductible after-tax 401(k) contributions, non-deductible after-tax IRA contributions are made with funds on which tax has already been paid. As stated above, in 2026, there is a limit to all IRA contributions (pre-tax, Roth and non-Roth after tax) of just $7,500, or $8,600 if 50 or older.

Form 8606 is used to report a non-deductible IRA contribution in each year one is made as well as each year you receive an IRA distribution as long as after-tax amounts exist¹². These forms should be retained together with supporting documentation “for all applicable years” to prove tax was already paid on a contribution¹¹. When there are both pre-tax and after-tax IRA contributions, withdrawals will contain a combinations of pre-tax and after-tax funds as long as after-tax funds remain. See the calculations on Form 8606¹³.

Back-door Roth IRA

Contributions to Roth IRAs may be limited by income and therefore may not be readily available to high-income earners. In 2026, the Roth IRA income limits are $153,000 (MAGI) for a single filer and $242,000 (MAGI) for joint filers¹⁴. Essentially the back-door Roth describes a multi-step strategy to allow high-income earners to convert non-deductible IRAs to Roth IRAs regardless of income as there are no income limits for Roth conversions¹⁵.

In the non-deductible 401(k) contribution discussion above, reference is made to the “Mega Back Door” Roth. This refers to the rollover to a Roth IRA of what might be a much larger amount of funds by way of in-service 401(k) distributions than the potential maximum of $7,500 ($8,600 for 50+) of IRA funds to a Roth IRA¹⁵.

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Managing IRA and 401(k) accounts can become complicated when dealing with contribution limits, account access and taxation rules. There are several interesting strategies which might be considered to increase specific benefits of these accounts for you. However, there are many moving parts and I suggest that some of these strategies fall into the “don’t try this at home” bucket. Professional assistance can be invaluable.

It's important to mention that this discussion did not touch on other retirement savings receptacles which might be considered such as taxable investment accounts and annuities.

If you’d like to discuss whether or how your IRA and/or 401(k) savings plan might be improved, or whether other retirement savings strategies may be beneficial, we’d like to talk to you. Please contact us for a complimentary consultation to discuss this issue.

This material is for informational or educational purposes only. It is not intended as investment advice and is not a recommendation for your retirement savings. Osaic Wealth, Inc. and its representatives do not offer tax or legal advice. Individuals should consult their tax or legal professionals regarding their specific circumstances.