401k

Rocky Mountain Student Media
TC==0

Rocky Mountain Student Media

TC==0
Apr 10 10 Comments

When investing in 401k, say if I put in $100 and the tax should be $25. Because I donโ€™t get taxed until I take the money out. Lets say 10 years later that money grew into $1000 and I take it out. Do I get taxed $250? Or do I get taxed $25?

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TOP 10 Comments
  • Workday
    peakon

    Go to company page Workday

    peakon
    You get taxed at the bracket you are at when taking out. Say your income in 2032 is at 36% bracket - you get taxed at 36% effective
    Apr 10 3
  • Traditional 401(k)s and IRAs are tax-deferred while Roth are tax-exempt

    $100 taxed today into a Roth @ 25% = $75 to invest => becomes $750 in 10 years = $0 in tax in 10 years

    $100 tax-deferred = $100 to invest => becomes $1000 in 10 years = variable tax in that year, likely $250+

    The reasons traditional is common are to not pay taxes in current year and hoping or assuming tax will be lower when withdrawn in retirement because no other income.
    Apr 10 2
  • Google / Eng
    dogfoodie

    Go to company page Google Eng

    dogfoodie
    Whatever you withdraw is taxed as ordinary income for the year you withdrew it.
    Apr 10 0
  • Merkle / Legal
    tc ๐Ÿ‘ฎโ€โ™‚๏ธ

    Go to company page Merkle Legal

    tc ๐Ÿ‘ฎโ€โ™‚๏ธ
    You get blind taxes of total comp

    So please pay or gtfo
    Apr 10 0
  • Uber / Eng
    _keepcalm

    Go to company page Uber Eng

    _keepcalm
    You deduct 100 off of your current income which comes off the your top tax bracket. When you withdraw it all just counts as income so whatever your income is that year. Itโ€™s calculated the same as if you had $100 in income that year( in the simplified case that you had no other income)
    Apr 10 0