Tax advantage of many employer
Radio Transcript, 60 seconds, for use during week
of Feb. 4.
This is an Invest Wisely minute brought to you by Iowa State University Extension.
Signing up for your company’s 401(k) plan is a great way
to get a tax break and save for retirement. You won’t
pay tax on your contribution until you take the money out at
retirement. Typically this gives you more money to invest.
For example, if you have $4,000 (four thousand dollars) to put
into a 401(k) plan each year, you can invest the entire amount. But
if you paid taxes on that income first, you might only have maybe
$2,800 ( two thousand eight hundred dollars) to invest each year. The
exact amount would depend on your tax bracket.
This tax deferral is an excellent reason to take advantage of
employer defined contribution retirement plans.
Invest Wisely comes from Iowa State University Extension through
a grant from the Investor Protection Trust providing investor
education on the web at investorprotection.org.