401k tax break

[WingZero94]

Isn't there some point at which you might as well put money into your 401k due to it coming out pre tax?

i.e. if I put 3% towards it, I won't see any impact to my after deduction paycheck.

 

[sciencewhiz]

Unless your marginal tax rate is >= 100%, you will see a reduction in your paycheck.

I did see a calculator a few years ago that worked if you got a refund, and had you increase your W4 allowances to get rid of the refund, putting the extra money into the 401k, so there was no net change in your paycheck. For example, if you got a $1000 refund and were in the 25% tax bracket, you could contribute $1300 to your 401k.

 

[spidey07]

Originally posted by: sciencewhiz
Unless your marginal tax rate is >= 100%, you will see a reduction in your paycheck.

I did see a calculator a few years ago that worked if you got a refund, and had you increase your W4 allowances to get rid of the refund, putting the extra money into the 401k, so there was no net change in your paycheck. For example, if you got a $1000 refund and were in the 25% tax bracket, you could contribute $1300 to your 401k.

Yep.

But the real question is why are you not contributing the maximum to your 401k and why would one give an interest free loan to the gubment?