Redirect After-Tax Deductions to a 401(k)/TSA
A client saving money in an after-tax credit union may consider the option of putting the money in a pre-tax qualified plan. To illustrate how much more they could put in the qualified plan, in either the Proposed #1 or Proposed #2 paychecks:
1.Reduce the After-Tax Deductions by the amount they are putting into the credit union (e.g. $250). This will increase their Net Pay by the same value.
2.Next, reduce the Net Pay by the amount it was increased.
TRAK will calculate the increase in income.