Quote:
Originally Posted by Hatterasguy
What gets me with 401k's is the money is taxed on the way out but not the way in. I think its a pretty safe bet that taxes are only going to go up, so I rather pay them now than later.
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When working, most folks are in a higher tax bracket than when they pull the money out. Since every nickel you put in a 401k reduces your current taxable income at a likely higher rate, that's often a good thing.
Additionally, one can escape some tax altogether in certain circumstances. I'm earning my pre-tax plan money in CA, but will be living in WA when pulling out these funds...which like several states, has no income tax.