Quote:
Originally Posted by csu87
Lots of different scenarios with taxes and 401s.
There is also a limit on how much you can contribute to your 401k per year. You could be a 25yo, who has only been in the workforce for a year or 2, have a 6 figure salary and a nice chunk of change saved up, and only have 30-40k in your 401k. Hell, Ive been putting in 6% + 6% matched by my employer since i graduated, averaging 80-90k/yr since graduation for the last 5 years, and i dont have 6 figures in my 401k, but have 6 figures in my savings accounts, and can comfortably afford a 50k car along with a house with my current salary. Add in my wifes salary and its just gravy.
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OK, thanks. 401 sounds like our RRSP. Your deposit limit is essentially 18% of previous years income (or $24,930, whichever is lower) and can be carried forward from year to year, and it is pretax. So, if you deposit the funds with aftertax income, you get the tax portion back when you do your taxes.
You do pay tax on the withdrawals after you retire as if they were income. So it is just tax deferral until you retire and in a lower tax bracket.