What are your tax savings if you contribute to a 401k?
Investing in a 401k is a great deal. Contributions, usually made through payroll deductions, are exempt from federal income tax, and earnings compound tax-deferred. When you eventually begin to make withdrawals — you can start once you reach age 59 1/2 — you will be hit with taxes, but at that point you may be in a lower tax bracket. Many people also get the benefit of their employer contributing to the account. The calculator below will show you how much money you can potentially save in taxes by participating in a 401k.
