Paying too much in taxes? Some steps you can take
On the Money From the January 6, 2006 print edition It’s a new year, often the occasion for two things: resolutions and income taxes. Benjamin Franklin left us many proverbs to ponder, particularly around the turn of a new year. One “resolutionary” admonition is, “Each year one vicious habit discarded, in time might make the worst of us good.” If paying too much income tax is a “vicious habit,” here’s some promising news for 2006. A new year brings us all closer to retirement. A fresh saving tool, the Roth 401(k), is now available. Starting in 2006, you are able to designate part or all of your 401(k) contribution to a Roth 401(k), if your employer’s 401(k) plan allows it. All income from Roth plans will be tax-free when withdrawn at retirement. You can contribute up to $15,000 (or $20,000 if you’re 50 and over) into a Roth 401(k), as opposed to only $4,000 (or $5,000) in a regular Roth. For those interested in discarding the vicious vehicle vice of...
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