Beginning in 2024, workers will be allowed to contribute up to $23,000 to their 401(k), an increase of $500 from this year. The increase applies to other retirement savings accounts, including the 403(b) plan, most 457 plans and the federal government’s Thrift Savings Plan.
You pay before taxes on traditional contributions so the net income hit is less.
Say your effective tax rate is 30%, then you are eating in gross pay only 18,900 off income to fund 27000 in 401K savings.
The whole point of tax deferred accounts really.
Roth contributions don’t work this way, but most do not max out funds using Roth given the tax difference in retirement vs working.
I want your job if you can put almost 19k a year in your 401k. I couldn’t even get close to that number.
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I’m sorry to hear about your medical condition. That’s a rough hand to have been delt. I’m happy for you that you’re planning ahead and I hope it goes as well as it can for you. My 401k is pretty on par for my age (in terms of a multiple of my annual income based on goggle research). I’ve been putting as much as I can in but no where even close to the limit. What’s pretty sad is most of my co-workers are only putting 5% maybe 10% away and they think that’ll be enough. I try to explain but the vast majority don’t care.
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While I totally agree with this, you need to be making quite a bit in order to have an effective tax rate of 30%. I make six figures and don’t even pay that much.
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