5 Great Workplace Tax Breaks: Get These Savings Now
1. Boost Your 401k Contributions
Are you taking full advantage of your retirement savings at work? Your 401(k), or whatever workplace retirement you have, is the first place to start. As we’ve written in Unlock Your Retirement Savings Potential: The 401k, 401(k)s are king not only because of their tax advantages — they’re made with pre-tax dollars and grow tax free — but also because they’re often accompanied by an employer match. A “match” means your employer may incentivize you to save by supplementing your savings up to a certain percentage.
From day one, the 401k’s attributes mean you can almost double your money. If you save the maximum ($17,500) and you’re in the top tax bracket (39.6 percent) and your employer offers a typical match (50 percent), then you’ve already nearly doubled the amount of money you’ve effectively saved ($33,180). When that money sits in your retirement account and grows tax free, that means it grows faster. Fifteen years later, you may stockpile over 3x in your 401k versus a regular account. You’ll have to pay taxes on that money eventually — but only on withdrawals, so it’s still a great deal.