sudoshakes, 7 months ago You pay before taxes on traditional contributions so the net income hit is less. Say your effective tax rate is 30%, then you are eating in gross pay only 18,900 off income to fund 27000 in 401K savings. The whole point of tax deferred accounts really. Roth contributions don’t work this way, but most do not max out funds using Roth given the tax difference in retirement vs working.
You pay before taxes on traditional contributions so the net income hit is less.
Say your effective tax rate is 30%, then you are eating in gross pay only 18,900 off income to fund 27000 in 401K savings.
The whole point of tax deferred accounts really.
Roth contributions don’t work this way, but most do not max out funds using Roth given the tax difference in retirement vs working.