The Truth About Your 401k Plan | 401k, 403b & 457 Plans Explained | Financial Education

by | Sep 23, 2022 | 457 Plan | 11 comments

The Truth About Your 401k Plan | 401k, 403b & 457 Plans Explained | Financial Education




Federal Tax rates
State Tax rates

National Average income.

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A lot of people get a job and get told they have a 401(k) or a 403(b) or a 457 or some other kind of qualified retirement plan, they get excited because they’ve been told how important it is to get a retirement plan.

They sign up and start contributing and never realize what is happening until it is too late. They have climbed a ladder that is leaning against the wrong wall…

Contributions are deductible but all that money grows tax deferred which means they’ll get you later! When you have accumulated a ton of money.

What if there was a way to pay taxes on the seed and not the harvest?

Pay now and then never again?

How does a 401k, 403b or 457 plan really work? How do federal tax brackets work? Should you invest in a Roth IRA or a Roth 401k? Find out in this video.

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00:00 – Intro
00:34 – Let’s talk taxes.
01:49 – Federal tax brackets.
03:44 – State taxes.
06:05 – The 401(k) Presentation, how it really works, start to finish.
09:29 – Historical tax rates.
09:49 – Back to the presentation.
12:00 – Breaking it down in an example.
13:20 – The 3 options to pay taxes on the seed.
13:42 – I see this all the time in my career.
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11 Comments

  1. John Phelan

    So if my company matches 3% then I should only contribute 3% so that they cover my taxes? Im assuming its unwise to contribute more because it will increase the amount the irs taxes without the company dollar for dollar coverage?

  2. mplslawnguy

    The main reason I contribute to a 457b pre-tax, is because you can withdraw upon retirement, regardless of age. I don't believe this is the case for 401K. I will need to access that money before age 59 1/2, so I need to invest part of my retirement funds this way. The rest goes to Roth, because like you said, you only pay taxes on the seed, which will most likely benefit you in the long run.

  3. Derek Selinger

    Even though I am Canadian I wanted to pop in and see your stuff. Very good confident presentation. You communicate "trust". Super important for this. Well done!

  4. The Dividend Tree

    This is great information! Appreciate you sharing this. My wife has a 403b and it's frustrating how much Uncle Sam will be getting when we retire. This is why we also have Roth IRA's. Like #10

  5. Daddy Debt

    Thanks for this information!

  6. The Intelligent CPA

    That presentation is so awesome, you should have lead with that. Love ❤️ the comparison of paying taxes on seeds or harvest. I agree, Roth is the way to go!

  7. Unorthodox Savings

    I’m thankful my employer has a dollar for dollar 401k plan but this video is extremely helpful. I know so many people close to retirement stressing on how to retire because they didn’t learn about this earlier !

  8. David Ranieri

    Seed. Thanks for another great video. This is great especially for people that don't have a company that offers a 401k ot are older. But we would rather pay on the seed anyway.

  9. SergeyCH

    I only regret that i was unable to use cares act to withdraw some money from 401k before Dec 31 of 2020. I would pay off my debts including morgage by now.

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