Author Topic: Impact of 401K vs. Roth IRA contributions on Social Security  (Read 926 times)

rudged

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Impact of 401K vs. Roth IRA contributions on Social Security
« on: January 22, 2022, 10:01:31 AM »
I haven't run across anyone writing about the effect of making tax deferred contributions to 401K/403(b) and 457 plans on how much you can eventually expect from Social Security. If you make a tax deferred contribution to a retirement plan (and thereby declare less taxable income), your Social Security taxes will be reduced. But if you do this over a career of working, it seems like this would adversely affect your eventual benefit. I'm thinking of making some Roth conversions during the next few years when tax rates are artificially low and this seems like yet another reason to do so despite the fact I continue to work.

 

seattlecyclone

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Re: Impact of 401K vs. Roth IRA contributions on Social Security
« Reply #1 on: January 22, 2022, 10:28:48 AM »
Social security taxes are not reduced for retirement contributions.

pasadenafr

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Re: Impact of 401K vs. Roth IRA contributions on Social Security
« Reply #2 on: January 22, 2022, 11:27:14 AM »
If you make a tax deferred contribution to a retirement plan (and thereby declare less taxable income), your Social Security taxes will be reduced.

No, they're not.

Take a look at your W2 - box 3, Social security wages. These include your pre-tax 401(k) contributions.

See also this table on the IRS website

rudged

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Re: Impact of 401K vs. Roth IRA contributions on Social Security
« Reply #3 on: January 22, 2022, 12:36:32 PM »
Thanks!

 

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