Will they take taxes from my paycheck?

Question

well just last week i started the 401k plan with john hancock. they will be taking 50 dollers every two weeks from my paycheck. do they still take out taxes?? because someone told me this comes b4 t axes, i dun really under stand it. can u please explain to me?

Answer 1

A 401K is a pre-tax plan.  This means that the $50 is subtracted from your paycheck before figuring out ANY taxes!  It is the REMAINDER of your paycheck that is taxed....which is GOOD.  This means that you have a smaller amount of your income taxed.  If you didn't have the 401K, $50 MORE of your income would be  taxed every pay period.  By saving $50 every two weeks pre-tax you are putting away $1300 a year right now - tax deferred!  This is good because when you withdraw the earnings in retirement you may very well be in a lower tax bracket.

Answer 2

you will always have taxes taken out of your check.

401k and any other retirement plan you join will be pre-tax dollars. meaning that after that amount has been taken out of your paycheck, the remaining will be taxable.

Answer 3

Yes.  They will take out taxes even if you don't contribute to your 401k.

Answer 4

Your gross pay is what your total wages for that week.  They will deduct the $50 from your gross pay before taxes are taken out.  That gives you your net taxable ipay.  That is what they take the taxes out of.

Answer 5

The 50 dollars comes out before they figure taxes. There will still be taxes, just not as much.

Answer 6

yes they will still take the taxes

Answer 7

Your income subject to income tax will be reduced by 50 DOLLARS every two weeks.  Your income subject to Social Security and Medicare taxes will be unchanged.