After-Tax Deduction

Benefit plans that are purchased with after-tax dollars are exempt from FIT (federal income tax), FITW (federal income tax withholding), FICA (Federal Insurance Contributions Act, i.e., Social Security and Medicare taxes), and FUTA (Federal Unemployment Tax Act). However, because the contribution is made on an after-tax basis, the contribution does not reduce the amount of wages subject to FIT, FITW, FICA, and FUTA.