Definition
Retirement plan money contributed from pay that has already been taxed, separate from pre-tax and Roth contributions. In plans that allow it, after-tax dollars sit in their own 401(k) bucket: the contributions come back tax-free, but the earnings are taxed on withdrawal unless converted to Roth.
Why it matters
After-tax contributions matter mostly to high savers who have filled the regular buckets: converting them to Roth (often called a mega backdoor Roth) turns taxed-once money into tax-free growth.
Example
A high earner who has maxed regular 401(k) deferrals adds $10,000 of after-tax contributions and converts them to the plan's Roth side soon after. The $10,000 was already taxed, the quick conversion means little extra tax, and future growth is tax-free.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.