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401K (Employer Provided)
Max out your contributions to this! Every dollar you put in is pre-tax, so if you put in $5,000 for the year, that is $5,000 you are not taxed on. If you received that $5,000 in your paycheck take home pay, it would only be about $3,600 after taxes! Also most companies match your contributions which is more free money going to your retirement. If you put in $1,000/year versus taking home the $1,000 in your paycheck, the $1,000 in your paycheck would only be approx. $720 (you have approx. $280 additional because you put it in your 401K. Also since companies probably match (on average) 5% you actually have $1,050 in your 401k versus approx. $720 in your hand). Now if you put in $10,000/year (you have $2,800 additional because you put it in your 401K and since your company matches 5% you actually have $10,500 versus $7,200 in your hand). The best way to see the financial difference is when you change up or start your 401k deductions. For example, if you put in or increase your 401k amount by $100 per paycheck, your actual take home pay will only go down approx. $72.
Individual Retirement Account (IRA)
Roth -
The money you put in has already been taxed and there will be no taxes on the earnings on this when you retire. If you have 10 or more years till retirement the earnings could be substantial and they are all yours! Max out your contributions here.
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Traditional -
If you are within certain income brackets you get a tax deduction on the year you make the contribution, but you will get taxed on the earnings when you take them out. If you have many years until retirement consider stopping the funding of your regular/traditional IRA and open up and start funding a Roth IRA. You can convert this IRA to a Roth, but you will have to pay all taxes on any deductible contributions you have made to this point in year you convert.
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Reimbursement Accounts
Employee/Family Health Care Expenses -
Most everybody has non-covered health, dental, & vision expenses. If your company offers a Section 125 Flexible Spending Account, use it! If your average yearly out-of-pocket non-covered expenses are $1000, this gets treated as pre-tax income thereby only reducing your yearly earnings by ~$720 even though you actually were able to pay $1,000 worth of health care bills with it!
Dependent Care Expenses -
This works the same as "Employee/Family Health Care Expenses", except it can be used to pay for childcare with pre-tax dollars or home care for disabled or elderly dependent people.
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