After-tax contribution

An after-tax contribution, or excess deferral, is money you put into your 401(k) or other employer sponsored retirement savings plan in addition to your pretax contribution.

You might make an after-tax contribution if you've added the maximum pretax amount permitted for the year, but haven't reached the ceiling that your employer allows.

The advantage of making an additional contribution is that any earnings on the after-tax amount accumulate tax deferred. The disadvantage is that figuring the tax that's due on your required distributions may be more complicated than if you had made only pretax contributions.