Well I do all of the pretax too, the max $30,500You do, by not getting the deduction from your gross income that you would get if you contributed to the pre-tax ("traditional") side of your 401k.
What you mean? I do Roth 401k and don't pay any extra taxes.
EXAMPLE:
Assume someone would pay a marginal tax rate of 12% on all their contributions for the year in question. If they contribute $10k/year to their Roth 401k, they are paying tax on those dollars before they go to the 401k. If, however, they contributed the $10k to their pre-tax 401k, their taxable income would go down by the same amount, and they would therefore pay less income tax ($1200 less in this case). This is why many people will say that this person put $10k into the 401k, but only paid $8800 to do so.
And this is only the simple math part! Their are other possible benefits to reducing one's taxable income, too (see Walkure's "other items" list above).
BP
Doesn't include the employer contribution.Statistics: Posted by samulta52 — Sun Feb 02, 2025 5:54 pm