PLANADVISER - March/April 2021 - 36

plan design | participants
Take It Past the Limit
Voluntary after-tax retirement savings accounts as a design feature
Y
ou know about
saving in a workplace
the benefits of
retirement
plan. After all, putting aside
money is great; directing it into a taxadvantaged
account is even better.
But clients may be able to save their
employees even more. The annual
contribution limit is not the end of their
tax-advantaged saving opportunities.
What could be a useful strategy
to suggest to a company with high
earners is voluntary after-tax retirement
savings accounts. Making aftertax
contributions allows the saver to
invest more money, with the potential
for tax-deferred growth.
For comparison: 401(k)s and Roth
401(k)s have an IRS saving limit of
$19,500 for elective deferrals for those
under age 50, and $26,000-including
catch-up
contributions-for
those
50 and older; the after-tax accounts
are subject
to the IRS overall plan
maximum contribution caps of $58,000
for all contributions for those under 50
and $64,500 for those 50 and up.
According to the IRS, a person using
such an account would make after-tax
contributions, and, when he takes his
money out, none of those contributions
would be taxed. Unlike with a Roth
401(k) or individual retirement account
(IRA), though, earnings would be taxed.
In December 2019, the Setting
Every Community Up for Retirement
Enhancement (SECURE) Act increased
the age at which people must take
required
minimum
distributions
(RMDs) from their 401(k), from 70.5 to
72. Americans, accordingly, have more
time between when they retire and
must begin their RMDs. An after-tax
retirement savings account can bridge
that gap nicely, says Wilson Coffman,
president of Coffman Retirement Group
in Huntsville, Alabama.
And, just as people who expect to
face higher taxes in retirement gravitate
to Roth accounts, the hybrid approach
of an after-tax account permits at least
some of their money-their contribu36
| planadviser.com March-April 2021 Art by Aya Kakeda

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PLANADVISER - March/April 2021

Table of Contents for the Digital Edition of PLANADVISER - March/April 2021

A Season for Change
Through the Ages
Overcoming Obstacles
A Plan Feature Run Wild
Not Just Retirement Services
Take It Past the Limit
Lifetime Income Illustrations
Wanna Be a PPP?
PLANADVISER - March/April 2021 - Cover1
PLANADVISER - March/April 2021 - Cover2
PLANADVISER - March/April 2021 - 1
PLANADVISER - March/April 2021 - 2
PLANADVISER - March/April 2021 - 3
PLANADVISER - March/April 2021 - 4
PLANADVISER - March/April 2021 - 5
PLANADVISER - March/April 2021 - 6
PLANADVISER - March/April 2021 - 7
PLANADVISER - March/April 2021 - 8
PLANADVISER - March/April 2021 - 9
PLANADVISER - March/April 2021 - 10
PLANADVISER - March/April 2021 - 11
PLANADVISER - March/April 2021 - 12
PLANADVISER - March/April 2021 - 13
PLANADVISER - March/April 2021 - 14
PLANADVISER - March/April 2021 - 15
PLANADVISER - March/April 2021 - A Season for Change
PLANADVISER - March/April 2021 - 17
PLANADVISER - March/April 2021 - 18
PLANADVISER - March/April 2021 - 19
PLANADVISER - March/April 2021 - Through the Ages
PLANADVISER - March/April 2021 - 21
PLANADVISER - March/April 2021 - 22
PLANADVISER - March/April 2021 - 23
PLANADVISER - March/April 2021 - 24
PLANADVISER - March/April 2021 - 25
PLANADVISER - March/April 2021 - Overcoming Obstacles
PLANADVISER - March/April 2021 - 27
PLANADVISER - March/April 2021 - 28
PLANADVISER - March/April 2021 - 29
PLANADVISER - March/April 2021 - A Plan Feature Run Wild
PLANADVISER - March/April 2021 - 31
PLANADVISER - March/April 2021 - 32
PLANADVISER - March/April 2021 - 33
PLANADVISER - March/April 2021 - Not Just Retirement Services
PLANADVISER - March/April 2021 - 35
PLANADVISER - March/April 2021 - Take It Past the Limit
PLANADVISER - March/April 2021 - 37
PLANADVISER - March/April 2021 - Lifetime Income Illustrations
PLANADVISER - March/April 2021 - Wanna Be a PPP?
PLANADVISER - March/April 2021 - 40
PLANADVISER - March/April 2021 - Cover3
PLANADVISER - March/April 2021 - Cover4
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