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Investments & Financial Planning

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  4. Do I pay taxes on the money I contribute to my 401(k) retirement plan ?

Do I pay taxes on the money I contribute to my 401(k) retirement plan ?

Your pre-tax 401(k) contributions are deducted from your gross pay before Federal income taxes are withheld. You do not pay federal taxes on this money until you withdraw it from your 401(k) account. You are required to pay Social Security tax on all 401(k) contributions. For state income tax, most states exempt 401(k) contributions from taxation. Depending on where you live your contributions may be subject to atate and or local income taxes.

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