401(k) Plan

Okta deducts your contributions from your paycheck on a pretax basis. That means your taxable income is lower, so you pay lower federal and state taxes now.

Your 401(k) savings and investment earnings accumulate on a tax-deferred basis.

You’ll pay tax when you withdraw money from your account at retirement (or, in other cases, for example, if you leave Okta and withdraw your money from your account).

A rollover to another employer’s plan or an IRA is generally not taxable.

This option may be best if you want to reduce your current taxable income or if you think you’ll be in a lower tax bracket when you get to retirement.

Your contributions go into your account after-tax, meaning you pay federal and state taxes on the amount contributed.

Your investment earnings accumulate on a tax-free basis. You won’t pay taxes on your earnings when you withdraw money from your account in retirement, which generally means 5 years after the initial contribution and attaining age 59 ½.

A rollover to another employer’s plan or to a Roth IRA is generally not taxable.

This option may be preferable if you believe tax rates may be higher in the future and you have a longer time horizon until retirement to accumulate tax-free investment earnings.

• If you max out your pretax or Roth 401(k) contributions, you can set aside even more money for your future through an after-tax (non-Roth) account.
• You can withdraw your contributions tax-free at any time.
• Investment earnings are tax-deferred until withdrawn; however, you can convert your after-tax contributions to your Roth account (called an “in-plan conversion”), and after the conversion, future earnings are tax-free.
• You will need to call Fidelity at 800-294-4015 to request a conversion. You can setup an automatic conversion of all your future after-tax contributions.
• You might consider this option when you want to save more than the IRS limits for pretax and Roth contributions.