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I recently increased my after-tax 401(k) contributions from 6 percent to 10 percent. (The pre-tax amount was already maxed out, at 15 percent.) I had supposed that this would decrease my take-home pay on a one-to-one basis (i.e., for every additional dollar going into my 401(k), one less dollar would go into checking).

What I found, however, was that the decrease in take-home pay was greater than the increase in 401(k) savings. The reason: All federal taxes (Federal Witholding, FICA, and Medicare) also increased with this change--about 5 percent, overall.

Is this an error? Why would after-tax 401(k) savings be taxed at a higher rate than realized income?

No one in our benefits department or payroll department seems to know.
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