The answer really depends on what your plan allows. You should check your retirement plan documents or check with you plan administrator to be sure.
- A pre-tax deduction is a deduction taken from gross pay that reduces the employee’s taxable wages.
- A post-tax deduction is a deduction taken from gross pay after taxes have been taken. In this scenario, post-tax deductions are also known as Roth contributions.
Roth contributions are different from other contributions because they are not excluded from taxable income. Participants are able to elect to have both pre-tax and post-tax contributions, if your plan specifically allows it.
Please keep in mind that the pre-tax and post-tax contributions cannot exceed the maximum permitted statutory IRS annual deferral limit. The maximum contribution limit for all of your plans can be increased each January 1st based on the cost-of-living increase during the prior year. The new limit will be announced by the IRS in mid-October.