zlacker

>>toomuc+(OP)
Read somewhere that they get 12% match on 401k. No pensions, but there’s almost none of that in today’s world.

>>pixela+y3
Pensions seem nice to have, but IMHO, it's generally better for employer and employee when compensation is paid immediately. The accounting is simpler, accountability is easier, and there's no long term entanglements.

>>toast0+F5
What i don't understand about 401k is why is there such a strict limit on personal contributions, but employer can contribute significantly more? It's all compensation one way or another, why shouldn't I be able to allocate my compensation how I please?

>>hamand+zd
Income contributed to a 401k is not taxed at the time of earning. Not putting a limit on contributions would mean you could pay very little income tax. A wealthy person making 200k a year could contribute 100k to their 401k and more than halve their total income tax paid.

>>Manuel+si
>A wealthy person making 200k a year could contribute 100k to their 401k and more than halve their total income tax paid.

They'll pay it when they take it back out. At best they're saving the difference between the bracket rates in exchange for letting your money slosh around the markets for your working life.

>>potato+It
401k is taxed at the time of withdrawal, but that's usually at a lower tax bracket.

500k in income 1 year is ~$162k in income tax.

500k in income split across 2 years is $68.5k each year totalling $137k.

It's not massive but it's still a decent chunk of taxes people can avoid.