401K Question...

[alnorth]

Originally Posted by 58-4ever

Yes, but my question was referring to the fact that maybe they would take less taxes from my gross income if some of it were placed into a 401K account. My guess would be no, but there was wishful thinking.

If you contribute pre-tax, then it is deferred income that will not be taxed this year, and your overall witholding should decrease since your taxable income will decrease.

If you contribute post-tax, its treated as normal pay and will be withheld and taxed this year like normal. If you do both, the portion that goes in pre-tax is not taxable and should reduce the withholding, while the portion thats post-tax is taxable and wont change the withholding.