Ways to Save Yourself and Your 401(k) From Rising Taxes

Taxes will go up if provisions in the Tax Cuts and Jobs Act are allowed to sunset, but there’s still time to lock in lower taxes on your 401(k) savings.

A pair of scissors sits open on top of a calculator that displays the word tax.
(Image credit: Getty Images)

There are plenty of good reasons to save for retirement using your employer’s 401(k) or a similar tax-deferred plan. And if you’ve attended one or more new-employee sessions during your working life, you’ve probably heard all these reasons, including:

  • A 401(k) makes saving easy and almost automatic. You can pretty much set it and forget it.
  • Investing in the market can sometimes be seen as a better way to grow your money in the long term rather than using a CD or savings account. (Yes, even now, as interest rates have risen.)
  • If your employer matches a percentage of your contributions, you’re basically getting free money every month.
  • There’s the allure of the upfront tax break: The money you save to your 401(k) comes out of your paycheck before taxes are calculated. You won’t pay taxes on your contributions or earnings until you start making withdrawals in retirement.
  • Putting off paying those taxes until after you retire may make sense because you may be in a lower income tax bracket when you retire.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Cole Czajkoski, Investment Adviser Representative
Freedom Financial Group

Cole Czajkoski is a retirement planner and Investment Adviser Representative with Freedom Financial Group. He graduated from Auburn University with a bachelor’s degree in marketing and holds a Series 65 securities license as well as life and health insurance licenses. Cole helps build retirement plans for new client families, and he assists with many of the behind-the-scenes functions at the firm.