![]() ![]() All of this adds up to a big upside for long-term, tax-deferred growth. Investment growth in your 401(k) is also tax-deferred meaning you don’t need to pay annual taxes on interest earned. The main advantage of a traditional 401(k) is that you can make contributions straight from your paycheck pre-tax-saving you 10% to 37% on your contributions, depending on your income tax rate. In simple terms, a 401(k) plan is a retirement savings account offered by your employer, with contributions set as a consistent monthly amount, typically as a percentage of your salary. For a quick refresher, we outlined the basics below. To better understand this, it’s important to first examine how each investment vehicle works. If you (and your spouse, if filing jointly) exceed income limits by the IRS, you may not be able to take full advantage of the tax benefits of both. However, while you can always contribute to both accounts, your eligibility to receive the tax benefits of these plans depends on your income. In fact, this is the most ideal situation for individuals as it allows you to take advantage of the various tax benefits of both retirement accounts. One of the most frequent questions we encounter is, “Can I contribute to both a 401(k) and IRA?” When it comes to building retirement savings, it’s easy to feel confused about where you can save, and how much. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |