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Your 401k and Taxes…More Can Be Less
You’ve followed all of the financial media advice about maximizing you contributions to tax-preferred deferred compensation–401k plans, specifically–and you accumulated an impressive balance. Now comes the downside…when you withdraw those funds, they are taxed as ordinary income. You intuitively knew that going in, but what you may not have realized is that as ordinary income, these withdrawals also have the compound affect of pushing your Social Security benefits into the taxable arena. The point is, a dollar is likely not to be a dollar at that point, so you need to weave that into your planning. The Motley Fool’s Christy Bieber takes a look at this matter, particularly as it relates to 401k plans, in an article posted today on www.fool.com. Check it out here..
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