Unless you make very little money, you always want some pre tax, because the first 12k income is tax free (standard deduction), and the next couple tax brackets are small, so you should always be pulling pre tax money until you start hitting the higher tax brackets, at which point you'd pull from your Roth.
Pre-Tax is always going to be the best option unless your employer coverage doesn't meet minimum essential coverage or pass affordability guidelines. Then it depends on your income level and if you qualify for a subsidy. For the majority of people, pre-tax wins without question.
By redirecting pre-tax income into your super, you reduce your taxable income and potentially pay less tax. This maximises your retirement savings and takes advantage of the concessional tax treatment of super contributions, leading to significant long-term benefits.
It should definitely be pre tax, either via salary sacrifice or personal contribution and NOI submission to the fund.
Both pretax and Roth contributions have potential tax advantages. If you anticipate being in a higher tax bracket in retirement than you are now, making after-tax Roth contributions may help you because you'll be able to take out the contributions and earnings tax free.
If you exceed your concessional contributions cap. If you exceed your concessional contributions cap, the excess concessional contributions (ECC) are included in your assessable income. ECC are taxed at your marginal tax rate less a 15% tax offset to account for the contributions tax already paid by your super fund.
For high-income savers who have access to aftertax 401(k) contributions, fully funding the 401(k) up to the $69,000/$76,500 limit will tend to beat saving in a taxable account, especially if the investor has a good-quality plan and doesn't need the liquidity of the taxable account.
Keep more of your paycheck with pre-tax contributions. One of the benefits of an HSA is that no taxes are withheld from HSA contributions made through payroll deductions — so every dollar you contribute from your paycheck goes directly into your account.
You may be able to claim a deduction for personal super contributions you make to a complying super fund or retirement savings account (RSA). To claim a deduction, you must first give your super fund or RSA provider a valid notice of intent and receive an acknowledgment form from your fund or RSA provider.
Simply put, pre-tax means that premiums are deducted before taxes are calculated and deducted; after-tax means that premiums are deducted after taxes is calculated and deducted.
Our guideline: Aim to save at least 15% of your pre-tax income1 each year, which includes any employer match. That's assuming you save for retirement from age 25 to age 67. Together with other steps, that should help ensure you have enough income to maintain your current lifestyle in retirement.
Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
According to Fidelity, investors should aim to save 15% of their pre-tax income annually, including any match.
Pretax deductions from your paycheck reduce your taxable income, which saves you money by reducing the amount of tax you pay. Because of the money saved, this is generally helpful for most people. However, you can elect to waive a pretax deduction and pay after-tax.
Calculate your after-tax income
If you contribute to a pre-tax workplace retirement plan, or you have money deducted from each paycheck to pay for benefits like health insurance, add those amounts back in before calculating your monthly take-home pay. Those are fixed expenses that you'll want to account for.
For health insurance, the decision between pre-tax and post-tax contributions depends on your financial strategy and healthcare needs. Pre-tax health insurance contributions lower your taxable income, which means you could pay less in income tax throughout the year.
When you contribute money to an HSA, it decreases your adjusted gross income (AGI) which determines your taxable income. Since the U.S. runs on a tax rate system based on your income, the lower your AGI, the lower your tax bill.
Gym memberships. While some companies and private insurers may offer discounts on gym memberships, you generally can't use your FSA or HSA account to pay for gym or health club memberships. An exception to that rule would be if your doctor deems fitness medically necessary for your recovery or treatment.
So what are after-tax deductions' primary advantages? One is that future benefits (such as Roth IRA withdrawals) will not be taxed when done according to the rules. Another benefit is that take home pay may be a little higher. The primary disadvantage of post-tax deductions is that the tax liability is also higher.
The 401(k) contribution limit for 2025 is $23,500 for employee salary deferrals, and $70,000 for the combined employee and employer contributions. If you're age 50 to 59 or 64 or older, you're eligible for an additional $7,500 in catch-up contributions.
This is known as catch-up concessional contributions. Unused cap amounts can be carried forward for up to five years before they expire. To be eligible to make catch-up CCs, one criteria is your total super balance must be below $500,000 at the prior 30 June.
Unless timely distributed, excess deferrals are (1) included in a participant's taxable income for the year contributed, and (2) taxed a second time when the deferrals are ultimately distributed from the plan.