Question about 401k and taxes and similar stuff

XemaSab

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Tue Jun-27-06 10:18 PM
Original message

Question about 401k and taxes and similar stuff

So it's time to buy into the 401K at work. I really have no idea how much to invest, but I want to minimize my taxes.

Is there a simple tool that will let me figure out how to lower my tax bracket?

How does student loan interest figure in to all this??

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spindrifter

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Tue Jun-27-06 10:22 PM
Response to Original message

1. Why not check with your H.R. person

to see if s/he can recommend a financial planner. We have a bunch of these types that hang around hoping they can sell us their products. The person might be able to tell you something about what you should be doing, given that you have a student loan.

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Floogeldy

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Tue Jun-27-06 10:26 PM
Response to Original message

2. How much can you contribute and still get by comfortably?

Is your employer matching? :)

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XemaSab

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Tue Jun-27-06 10:51 PM
Response to Reply #2

3. I think the employer matches

up to like, 3%.

I really would prefer to have all my paycheck, but it's like eating your brussels sprouts: you may not like it, but it's good for you.

Our HR person frankly doesn't know much about it at all (and she doesn't know where the company stickers are either).

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KitchenWitch

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Tue Jun-27-06 10:55 PM
Response to Reply #3

4. I would do 3% then

Maximize the employer contribution.

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speedoo

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Tue Jun-27-06 11:34 PM
Response to Reply #4

5. Absolutely. Make sure you get the full employer match.

Then if you can invest more beyond that, do so.

Why?

1. Save taxes now and on the future 401k earnings.

2. Get ready for retirement... the sooner you invest, the more the power of compounding will make your 401k grow.

I assume you are fairly young. The younger you are the more you need to invest in stocks.

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LSK

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Wed Jun-28-06 01:26 AM
Response to Reply #3

6. its pretax money, so its not really that much of a difference

So if you make lets say 52k per year, thats 1k per week, then its $50 a week going to 401k. And then they take the taxes out of the remaining $950 and you get your paycheck after those taxes taken out. So you are not really seeing a loss of $50 per week but rather something like $30.

I do 5%. After 4 years its almost $20k now. What investment options do you have with it?

You should do at least 3% and get the employer match.

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Wed May 15th 2024, 11:48 AM
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