For 2018, taxpayers can defer a maximum of $18,500 of income ($24,500 for those 50 or older) and deposit it into your 401(k) account. More good news – this does not include any employer match for which you may be eligible.
For someone earning $35,000 in the 25% tax bracket, by contributing 6% of their salary into a tax-deferred 401(k)— $2,100— taxable income drops to $2,900. The income tax on $32,900 is $525 less than the tax on the full salary. So not only does you get retirement get savings, they also lower their taxes today (Source: Intuit/TurboTax).
Further, if you’re not taking advantage of an employer match you’re effectively robbing yourself. Matching and profit sharing can potentially add thousands of additional dollars to one’s retirement account.
The Takeaway: Since each of us should make every reasonable effort to annually maximize our 401(k) – no matter how much it hurts, we’ve assembled some tactics to help you get there.
To read the full article please click here. If you would like more information you can schedule a no-obligation appointment with Beth Blecker. Please contact: / 845-627-8300.