I was told 4% was correct, but My pay dropped $20 for the $20 I put in the 401k. That doesn't seem right. Does anyone know the correct amount?
2007-12-19 03:08:43 · 6 answers · asked by kari45385 2 in Business & Finance ➔ Personal Finance
Your pay will always drop by how much you put in. Your taxes might be less, so you needd to modify your exemptions.
2007-12-19 03:18:59 · answer #1 · answered by Feeling Mutual 7 · 0⤊ 0⤋
You should invest in your 401K. You are investing for your future. The sooner you start, the better off you will be. (the more ahead you will be and time is your best friend, so you will maximize the growth potential, it will cost less in the long-term). Usually your employer matches so you want to take advantage of that money. 401K contributions are made with pre-tax dollars. It depends on your income. You may have to experiment. How much can you afford? You should max it out if you are able to. If your employer contributes match dollars to 4% then I would do at least 4%. Find a way to cut corners so you can get that money from your employer.
2007-12-19 03:16:18 · answer #2 · answered by Unsub29 7 · 1⤊ 0⤋
any amount will effect you take home pay -- what you need to do is match up to the what the company puts in -- think of it this way if the company is willing to give you a dollar for every dollar you put in up to 5% than in fact they are giving you 5% free money and you should be taking it and not worrying how how much your pay check will be reduced!!!! also at the same time you started putting money into the 401k you should have went to hr and changed you w-4 to reduced the amount of taxes being taken out so the check would not be reduced as much -- clear as mud right == email me if you do not understand!!!
2007-12-22 22:45:02 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Go to:
www.paycheckcity.com
You can run various scenarios.
Your take home pay will always drop if you put money in to a 401k but usually not as much as the contribution itself. For me, every $100 I put in, my take home only drops by $68.
2007-12-19 06:23:48 · answer #4 · answered by Wayne Z 7 · 0⤊ 0⤋
it depends on how much tax you have to pay right now.
If you don't pay much in taxes, then your take home pay will drop almost as much as your 401k contribution.
On the other hand, if you earn enough to pay a lot of taxes, then your take home pay will only drop about 1/2 of what you contribute.
2007-12-19 03:17:14 · answer #5 · answered by Joe K 3 · 0⤊ 0⤋
ANY money you put into a 401(k) is going to reduce your take home pay. If you put $20 into the 401(k), your income is reduced by $20, but your withholding for federal/state taxes will go down too, so the effect is not 1 for 1.
I put 15% into my retirement plan and after taxes, my pay goes down by about 13%. Yes, it's a chunk of money, but I plan to be able to eat when I'm retired.
2007-12-19 03:15:06 · answer #6 · answered by Anonymous · 3⤊ 1⤋
It is right. You save the money off your taxes at the end of the year.
2007-12-19 03:19:58 · answer #7 · answered by Bob D 6 · 1⤊ 1⤋