A 401(k) continues to be a popular retirement plan many employers offer. Offered since 1981, they have produced many millionaires. You may be wondering, though, if 401(k) benefits are still a good choice in 2024.
Two Kinds of 401(k)s
Most employers offer their employees one kind of 401(k)—the traditional version. If you want an instant tax deduction, it can be just what you need. Every dollar you contribute will give you a deduction equal to the amount contributed—up to the allowable limit. They are automatically taken from your paycheck and put into your 401(k).The money in your retirement account grows tax-free until you withdraw it. At that time, you will pay taxes on the withdrawal at the same level as your normal income tax rate.
