401k Contribution EnrollmentDeferral Change Form Iuec85

Instructions and help about 401k Contribution EnrollmentDeferral Change Form Iuec85

hi this is john mcguire at the mcguire law firm i'm going to talk a little bit about 401k deferrals what they are and how they would impact your individual income tax so someone asked me what is a 401k deferral basically it's a qualified elected deferral from income that you can make contributions into a plan and you are not subject to federal income tax so you're saving money in terms of getting it into that retirement account and saving money in terms of that amount is not subject to federal income tax therefore you are saving someone income tax so you'll probably notice this when you get your w-2 from your employer your wages in box 1 of the w-2 are going to be less than the social security and medicare wages if all you did were these 401k elected deferrals so that's how you can tell that tax saving if you contributed five thousand dollars to your 401k then your wages are likely going to be five thousand dollars less than the wages that were subject to the self-employment tax if you