Q: In June, I’m eligible for 401K withholding at my company. The company matches 100% of what I’m going to contribute and they do that monthly. The Roth after tax option was available to me, so I decided on that route. My question is this; what’s the tax consequences of the company match?
A: Great question. If your company offers a Roth 401k, your contributions are made after your employer withholds taxes. Because you have already paid taxes, you will not owe taxes on these distributions.
However, if you receive a company match, this match is a pre-tax contribution. The company contributions and associated growth will be subject to ordinary income tax when distributions are drawn at retirement.