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Split after-tax contributions to a 401(k)

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A little-noticed change that went into effect in 2015 may provide a big boost to retirement-savers.

Strategy: Assuming your 401(k) plan permits it, make after-tax contributions to your account. Then you can convert those contributions to a Roth IRA. In effect, this provides greater access to Roths than you would normally have.

The ability to contribute to a 401(k) on an after-tax basis isn’t new—and shouldn’t be confused with the rules for Roth 401(k)s—but the new IRS rules make this option more attractive. (IRS Notice 2014-54)

Here’s the whole story: Generally, there are three main ways the tax law allows participants to contribute to a 401(k) plan.

1.  Pretax contributions: An employee can elect to defer part of his or her salary to the account on a pretax basis by making so-called salary reduction contributions to a 401(k) account. For 2015, you can make salary reduction contributions of up to $18,000 to your account or $...(register to read more)

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