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Important Features of the Adobe 401(k) Plan!

Find Out About the Following Adobe 401(k) Retirement Savings Plan Topics:

Traditional After-Tax Contributions

Traditional after-tax contributions offer an alternative to the pre-tax and Roth after-tax contributions already available in the Adobe 401(k) Plan and allow you to contribute above the IRS contribution limit for pre-tax and Roth contributions. In addition, traditional after-tax money can be converted to Roth.

 

Note: You can elect to have your contributions automatically transfer to after-tax contributions once you reach the IRS contribution limit for pre-tax and Roth contributions.

 

Note: Traditional after-tax contributions are not eligible for company matching contributions.

The Basics

The difference among pre-tax, Roth and traditional after-tax contributions is how they are taxed, both today and in retirement.

  • Pre-tax contributions. This money is not taxed when it is put into your account, leaving more money to work for you. Any growth on pre-tax contributions and any earnings is tax-free until you start making withdrawals—usually during retirement—when you may be in a lower tax bracket.1
  • Roth after-tax contributions. You pay taxes now on Roth contributions, but you will not pay income tax on contributions or earnings when you make withdrawals from your Roth balance, provided you have reached age 59½ and have held your Roth account for at least five years.1
  • Traditional after-tax contributions. Like Roth contributions, traditional after-tax contributions are made with after-tax dollars. You will not owe taxes on a withdrawal of your traditional after-tax contributions. However, you will owe income taxes on the portion of the withdrawal that represents earnings on those contributions (as well as a possible 10 percent federal penalty tax if you are under age 59½).

Your Options at a Glance

Provision Pre-tax contributions Roth after-tax contributions Traditional after-tax contributions
Contributions Pre-tax dollars. After-tax dollars. After-tax dollars.
Contributions subject to tax at distribution1 Yes. No. No.
Earnings subject to tax at distribution1 Yes. No, if you meet certain requirements. Yes.
Possible tax penalty on distributions before age 59½1 10 percent federal penalty tax on contributions and earnings. 10 percent federal penalty tax on earnings, but not contributions. 10 percent federal penalty tax on earnings, but not contributions.
Maximum annual contributions Subject to annual IRS personal contribution limits.

Also subject to the annual IRS total defined contribution plan limit.		 Subject to annual IRS personal contribution limits.

Also subject to the annual IRS total defined contribution plan limit.		 Not subject to annual IRS personal contribution limits.

However, contributions are subject to the annual IRS total defined contribution plan limit.

A Note About Contribution Limits

You can contribute 1 percent to 65 percent of your eligible pay. In 2025, the IRS limit for pre-tax and/or Roth after-tax contributions is $23,500 (including contributions made to a 401(k) through a previous employer). Learn more about the contribution limits. 

Pre-tax and/or Roth contributions (402(g) limit) $23,500
Adobe company maximum match2 $10,500
Traditional after-tax contributions $36,000
IRS maximum contribution limit total (415 limit) $70,000

2 Based on IRS-eligible annual compensation maximum.

If you’re ages 50–59 or over 64, you can contribute an additional $7,500 in catch-up contributions. In addition, you can make traditional after-tax contributions up to the IRS 2025 total contribution limit of $77,500.

 

If you’re ages 60–63, you can contribute an additional $11,250 in catch-up contributions. In addition, you can make traditional after-tax contributions up to the IRS 2025 total contribution limit of $81,250.

 

Note: Highly compensated employees will not be subject to additional limits on traditional after-tax contributions. However, if the Plan does not pass its annual testing, highly compensated employees may get a refund of some of the money they contributed to the Plan that year.

Have You Exceeded the IRS Limits?

Exceeding IRS limits can happen—for example, if you contributed to a previous employer's plan in the same year that you joined Adobe. If you contributed too much to the 401(k) Plan this year, you have until March 31 of next year to request a refund of the excess.

To get a refund of your excess contributions, please send the following to Vanguard by March 31:

  • Copies of all W-2 forms from previous employers and Adobe for the affected year.
  • A letter asking for a refund of your excess contributions. It needs to include:
    • Exact amount of the excess contributions to be refunded.*
    • Your name.
    • Plan number (096204).
    • Last four digits of your Social Security number.
    • Your mailing address, phone number and email address.

*This amount will include earnings on the excess contributions while they were in your account.

Send your W-2 forms and letter to Vanguard via one of these:

How to Take Action

You can begin making traditional after-tax contributions at any time by logging in to your account.

1 Taxes: Taking money from your retirement account can affect how much you’ll have to pay in taxes. You’ll owe taxes on pre-tax money. You won’t owe taxes on Roth earnings as long as you are age 59½ or older and it’s been at least five years since your first Roth contribution. If required by law, Vanguard will withhold some taxes for you. You may need to pay a 10% federal penalty tax if you take money out early.

Additional Resources

Adobe Traditional After-tax FAQs
Adobe Auto After-tax Conversion FAQs

Roth Contributions

Have you considered making Roth after-tax contributions to your Plan account? They can be beneficial because you pay taxes up front. You will not have to pay taxes on your contributions or on any of their earnings when you take the money out, as long as you have met the requirements.1

 

But how do you know if Roth is right for you? Consider these guidelines:

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Who Might Benefit from Roth Contributions?

If you are financially well prepared for retirement, Roth contributions can make sense. Strong savers and those with generous retirement benefits may face some pretty big tax obligations in retirement. Having tax-exempt savings could lessen the burden.

You might benefit by making Roth contributions if:

  • You are at the start of your career, and you expect your income to rise substantially over the years.
  • Your income is too high to save in a Roth IRA.
  • You are in a low tax bracket today—10 percent or 15 percent.
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Who Might Not Benefit from Roth Contributions?

You might not benefit from Roth contributions if you expect Social Security to be your main source of retirement income. In that case, your income—and tax rate—may drop in retirement.

You may also not benefit if:

  • You receive commissions or bonuses that may cause your pay to spike, temporarily lifting you into a higher tax bracket.
  • Your income qualifies you for valuable tax credits such as the earned income tax credit. Making Roth contributions could push your income over the eligibility limit for these credits.

Make your Roth contribution any time by logging in to your account.

Log in to your account

1 Taxes: Withdrawals of Roth 401(k) money are tax free if you are over age 59½ and made your first Roth contribution at least five years ago. If you withdraw Roth 401(k) money from your account before age 59½ or less than five years from the first contribution, the portion of the withdrawal that is attributable to earnings will be subject to ordinary income tax and a 10 percent federal penalty tax.

Roth In-Plan Conversions

The Roth in-plan conversion feature will allow you to convert all or a portion of your pre-tax and/or traditional after-tax savings to Roth money within the 401(k) Plan. You can also elect to have these conversions happen automatically.

The Advantages—and Costs—of a Roth Conversion

Roth money, including any earnings, can be withdrawn tax-free if you are age 59½ or older and the Roth account has been established for at least five years.1

 

Tax-free withdrawals could be a significant benefit in retirement. However, any potential future tax benefit must be weighed against the cost of a conversion today. You would owe ordinary income taxes on pre-tax money converted to Roth in the tax year of the conversion. In general, if you convert after-tax money to Roth, you would owe taxes on the portion of the conversion that represents earnings on that after-tax money. These taxes would need to be paid with money from outside the Plan when you file your income taxes for the year in which the conversion was made. One way to reduce the amount of taxes you owe when converting traditional after-tax money to Roth is to complete a conversion after every paycheck instead of waiting until the end of the year.

Consult a Tax Advisor Before Acting

Converting to Roth is not right for everyone. It depends greatly on your circumstances, including your current and estimated future tax rates. We recommend that you consult a tax advisor before taking any action.

As You Weigh Your Decision, Here Are Three Important Questions to Answer:

How to Take Action

If you decide to elect a Roth in-plan conversion, you can do so by calling Vanguard Participant Services at (800) 523-1188. Associates are available Monday – Friday from 5:30am – 6:00pm PT.

 

You can elect to convert a specific dollar amount or a percentage of your account to Roth.

1 Taxes: Taking money from your retirement account can affect how much you’ll have to pay in taxes. You’ll owe taxes on pre-tax money. You won’t owe taxes on Roth earnings as long as you are age 59½ or older and it’s been at least five years since your first Roth contribution. If required by law, Vanguard will withhold some taxes for you. You may need to pay a 10 percent federal penalty tax if you take money out early.

 

When you convert pre-tax money to Roth, you’ll owe taxes on the whole amount. When you convert traditional after-tax money, you’ll owe taxes on just the earnings. You should talk with a tax advisor before you do this. Later, when you take the Roth money out, you won’t owe taxes as long as you meet two conditions. First, you’re at least age 59½. Second, you converted the money at least five years earlier. If you take the money out early, you may have to pay income tax and a 10% federal penalty tax. If required by law, Vanguard will withhold some taxes for you.

Additional Resource

Roth In-Plan Conversion FAQs
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