Guest durktracy Posted October 1, 2009 Posted October 1, 2009 If a participant elects to defer 5% as Roth 401k, is the 5% calculated on the gross wages or the wages after all tax withholdings have been done? I have a payroll company that is applying the percentage after the withholding and I am not sure if that is correct. I need to have some backup for this and have yet to find anything. Thanks for your help!!
masteff Posted October 1, 2009 Posted October 1, 2009 Roth is after tax money - not pre-tax money. But it should be calculated based on the same compensation as regular 401(k) deferrals (unless the plan has a different definition of comp for designated Roth accounts). Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
jkdoll2 Posted October 2, 2009 Posted October 2, 2009 Roth should be based on Gross wages if that is what the document says - not wages after taxes are taken out. The back up should be your plan document that defines Compensation for each source.
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