Maximizing 401(k) Contributions to Reduce Tax Liabilities

Dr. Friday Tax Tips
Dr. Friday Tax Tips
Maximizing 401(k) Contributions to Reduce Tax Liabilities
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In this episode of ‘Dr. Friday Tax Tips – One Minute Moment,’ Dr. Friday, the president of Dr. Friday’s Tax and Financial Firm, emphasizes the importance of timely 401(k) contributions for tax savings. Highlighting a crucial reminder for the year 2024, Dr. Friday points out that contributions to employer-sponsored 401(k) plans must be made through W-2 earnings and cannot be retroactively added. For those in higher tax brackets, specifically mentioning the 24% tax bracket, each dollar contributed to a 401(k) plan could result in significant tax savings, equating to 24 cents saved per dollar contributed. This episode serves as a valuable piece of advice for individuals looking to reduce their tax liabilities through strategic financial planning.

Transcript

G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one minute moment.

401k contribution deductions. First let me put a caveat out there. If we’re already in 2024, so we can’t go backwards if you’re in an employer plan. It must come from your W-2 or the way that they’re paying you. We can’t just go and throw money into an employer 401k. So this may be planning for 2024 and it may be important because if you are in a higher tax bracket, let’s say you’re in the 24% tax bracket, every dollar you can put into your 401k could save you 24 cents. That’s almost a quarter guys. That’s a lot of money in savings if you want to reduce your tax liabilities.

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