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Yup! it is a dollar-for-dollar reduction. Meaning if you make 100K and contribute 10k(10%) to the traditional 401k, your taxable income will be 90k
That’s what I was thinking, thanks a lot. So even if you contribute most of it at the end of the year your refund wouldn’t be impacted
Depends on the type of 401K account you have setup. Roth (No) vs. traditional (Yes).
Mentor
Yep
I think your tax withholding each paycheck would also be adjusted for the amount of income that is being reduced. So you’ll end up saving tax $$ in each paycheck vs getting a large refund at the end of the year.
I was thinking that, but if I play catch up and contribute 30% through year end, there will have been a lot of paychecks from earlier this year at the higher income tax rate. Dono if remainder of paychecks would account for that…or maybe they would since I’m not thinking about the math all the way through