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From: Ted Dennison <dennison@telepath.com>
Subject: Re: Off Topic: Re: Ada Programmers Wanted in Denver Colorado
Date: 2000/11/17
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In article <974473195.584211@edh3>,
  Frode Tenneboe <ft@alne.edh.ericsson.se> wrote:
> Marc A. Criley <mcquad@earthlink.net> wrote:
>
> : Start contributing to your 401/K or other retirement savings plan as

> I'm not entirely familiar with the US system (thin ice ahead!),
> however if this is a tax motivated method of saving you are probably
> better off putting your savings elsewhere.

Very thin ice, I'd say. The way 401K's work, any money you contribute to
them is taken from your pay *before* your taxes are calculated.
Therefore it not only allows you to save, but it also reduces what you
have to pay in taxes (and could conceivably lower your tax *rate*).
Nothing in there gets taxed until you take it out, presumably when you
retire and won't have as much income (and thus a lower tax rate). But
there are even some exceptions that allow tax-free withdrawls (eg:
education, down payment for home). Additionally, employers will match a
certain percentage of what you put in, effectively increasing your
salary with more money that doesn't get taxed. Most plans offer a wide
range of investments to place your 401K money into, so you can choose
the risk/reward ratio you want. You can change investments relatively
easily, usually with no fees or loads. There generally aren't a lot of
drawbacks.

--
T.E.D.

http://www.telepath.com/~dennison/Ted/TED.html


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