Investing more in my 401K?

Question

I decided to to increase my 401K to 10% (previously 6%) because my company matches @ 50% up to 6%. I figured the additional deductions will help me with taxes. Am I right? I save in a money market account as well BUT I need to do something to lower my taxed income. Did I do the right thing? What else would you recommend and why?

Update:

That's my plan Luigi! Is there anything else I should do to help me tax wise BUT still allow me to live comfortably?

Luigi · Accepted Answer

You will save a little bit on taxes, but you also are buying while the market is down.  Both are good ideas.

Once you have the money market account up to 6 months expenses, consider opening a Roth IRA with the extra money that now goes into the money market.

acablue · Answer

If you have no need for the money right now or in the foreseeable future, you are always right to put your money in an IRA or 401K account.  It not only reduces your current income for the foreseeable future, but also your tax burden.

I contributed the maximum to my IRA during my working career and am now looking at a very large retirement account which will see me through my lifetime unless I do something really stupid with it.

Anonymous · Answer

Good job. I agree with the other two answers. A Roth IRA will provide you with tax-free withdrawals at retirement, or age 59 1/2. And you can always borrow against the principal. Good luck.

Common Sense · Answer

You've done great!!!!!  Next... open a ROTH IRA!!!!!!!!!!

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Investing more in my 401K?

4 Answers