How much tax deduction do I get for contributions to a 401(k) or IRA or Roth?
In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question: How much tax deduction do I get for contributions to a 401(k) or IRA or Roth?
"When you contribute money to a 401(k) or an IRA you do not pay tax on the contribution. So whatever your current taxable rate is you would save that amount in taxes. With a Roth IRA or with a T IRA, the Tax Free Retirement Account, those contributions are made with after tax dollars, so you pay the tax at your regular rate. Then when you take the money out, there is no tax on the distribution. The question is, do you want to pay a little bit of tax upfront or do you want to pay a lot of tax in the end when you take that money out in retirement? For me that's an easy decision, and for my clients, they find that knowing that their retirement savings are going to be tax free at distribution helps them sleep much better at night. It's a great peace of mind tool."