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What You Need to Know About 401(k) Taxes in 2017

Source: fool.com - Mar 27, 2017

Whether you contribute to a 401(k) that's run by your employer or are currently retired and withdrawing money from a 401(k), it's important to understand the tax structure of these accounts. Here's an overview of how the tax rules of 401(k)s work, and how to maximize their tax benefits for you.
Contributions to a 401(k)

In most cases, 401(k) contributions are made on a pre-tax basis. In other words, the money you contribute to your 401(k), up to the annual limit, is not subject to tax. For example, if you are paid a salary of $50,000 and contribute $5,000 to a 401(k) as a pre-tax, or traditional, contribution, your income from your job will be $45,000 in the eyes of the IRS.

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Category: General Business