This financial savings plan gives staff of a serious on-line retailer the chance to avoid wasting for retirement with after-tax {dollars}. Contributions are produced from a person’s present earnings, and certified withdrawals in retirement are tax-free. This contrasts with conventional 401(ok) plans, the place contributions are tax-deductible now however withdrawals are taxed in retirement.
A key benefit lies within the potential for tax-free progress. As a result of taxes are paid upfront, the earnings generated throughout the account, together with the preliminary contributions, usually are not topic to taxation upon withdrawal, supplied sure circumstances are met. This may be significantly helpful for people who anticipate being in the next tax bracket throughout retirement. The corporate match, if supplied, could also be topic to completely different tax implications.
