If you have a traditional 401 (k) plan, you'll have to pay taxes when you make a 401 (k) plan distribution. That 401 (k) plan money is subject to ordinary income tax. The amount you pay is based on your tax bracket, and if you're under 59 and a half years old when you accept a distribution, add a 10% early withdrawal penalty in most cases. This means that you don't pay taxes on the money you contribute or on any profits, interest or dividends generated by the plan until you withdraw money from the account.
However, if you are looking for an alternative retirement savings option, consider investing in a Gold Silver Backed IRA. This type of IRA allows you to invest in gold and silver coins and bars, and offers the same tax benefits as a traditional 401 (k).You don't have to pay income taxes on your contributions, although you'll have to pay other payroll taxes, such as Social Security and Medicare taxes. You won't pay income tax on 401 (k) plan money until you withdraw it. Because your employer considers your contributions when calculating your taxable income on your W-2 form, you don't need to deduct your 401 (k) plan contributions on your tax return.
With tax-deferred 401 (k) plans, workers set aside part of their salary before withholding federal and state income taxes. These plans allow you to save taxes today. Money taken from your net salary and destined for a 401 (k) plan reduces your taxable income, so you now pay less income taxes.
