Before Taxes
STUDENT asks:
MONEY PROF responds:
I meant in calculating the 10% use the gross pay, not the net pay.
Again, only use 10% if positive you won't take money out.
At your current tax bracket and your age you don't want it tax deferred.
Your further ahead with a Roth IRA. Which means no deduction now, but NO TAX later when you take the money out at age 59.
On a 401K you have to have it tax deferred.
You said: My suggestion is this amount should be 10% of your earnings before taxes.______________________
How do I get it taken out BEFORE taxes?
MONEY PROF responds:
I meant in calculating the 10% use the gross pay, not the net pay.
Again, only use 10% if positive you won't take money out.
At your current tax bracket and your age you don't want it tax deferred.
Your further ahead with a Roth IRA. Which means no deduction now, but NO TAX later when you take the money out at age 59.
On a 401K you have to have it tax deferred.
posted by MoneyProf at Monday, February 21, 2005
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