What are the tax benefits of a 401(k)?
An example of an AI chatbot conversation about tax benefits of 401(k) plans.
What are the tax benefits of a 401(k)?
A 401(k) plan offers tax-deferred growth on your investments, meaning you won't pay taxes on contributions or earnings until withdrawal.
Are there limits on how much I can contribute?
Yes, for 2023, the contribution limit is $22,500, or $30,000 if you're 50 or older, allowing for catch-up contributions.
What happens to my taxes when I withdraw from my 401(k)?
When you withdraw from your 401(k), the amount is taxed as ordinary income, and you may also face penalties if you're under 59½.
Can I roll over my 401(k) to an IRA?
Yes, you can roll over your 401(k) to an IRA without tax penalties, which can provide more investment options.
What are the advantages of a Roth 401(k)?
A Roth 401(k) allows for tax-free withdrawals in retirement, as contributions are made with after-tax dollars.
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