After-Tax Contributions & Automated Roth In-Plan Conversions
The News Corp 401(k) Savings Plan has both a pre-tax savings component and an after tax Roth component. You can contribute to either one or both but the sum of your contributions cannot exceed the annual limit of $22,500 (not including age 50 catch-up contributions).
Starting in 2022 we added a traditional “After-Tax” contribution source to the plan along with an automatic Roth in-plan conversion feature . This allows participants to contribute in excess of the IRS annual limit of $22,500 up to $66,000 (not including age 50 catch-up contributions) as a combination of employee (pre-tax, Roth and after-tax) contributions and employer contributions. Additionally any money that is placed into the plan “after-tax” can immediately be converted into your Roth account. Providing the same tax treatment on your “after-tax” as regular Roth contributions would have.
The below handy table shows the different treatment of your contributions choices:
Source | Tax Treatment On Contributions | Tax Treatment Upon Withdrawal |
Pre-Tax Contributions (up to $22,500 combined with Roth) | Goes in pre-tax.
Reduces taxable income |
Contributions taxed as income.
Earnings taxed as income. |
Roth Contributions (up to $22,500 combined with pre-tax) | Comes out of net pay.
Does not reduce taxable income. |
Contributions are not taxed upon withdrawal.
Earnings withdrawn tax free*. |
After-Tax Contributions (up to 10% of eligible pay not to exceed $25,075) | Comes out of net pay.
Does not reduce taxable income. |
Contributions are not taxed upon withdrawal.
Earnings taxed as income. |
After-Tax Contributions if immediately converted to Roth. (Up to 10% of eligible pay not to exceed $25.075) | Comes out of net pay.
Does not reduce taxable income. |
Contributions are not taxed upon withdrawal.
Earnings withdrawn tax free from Roth account*. |
*Earnings are tax free as long as you keep the contributions in your account for at least 5 years and are age 59 ½ when withdrawing.
To enroll in automatic conversion, call a registered Fidelity representative at 1-855-278-4015. You cannot elect this feature online.
For more information on After-Tax contributions see this handy PDF from Fidelity.