If you don’t have a 401(k) plan, you could be paying an extra $5,000 in income taxes this year.1 Once paid, that money is gone forever.
How to save $5,000 in taxes this year1.
No other retirement plan lets you save as much as a 401(k). By investing the maximum amount possible ($17,000 this year), you actually save personal income taxes. The $17,000 is tax deferred, which means it reduces your tax liabilities today. By investing the maximum to your 401(k), you reduce your taxable income, which could save you as much as $5,000 this year.
| Example of personal savings | With a 401(k) | Without a 401(k) |
|---|---|---|
| Salary | $80,000 | $80,000 |
| Percentage contributed to your 401(k) | 6% | 0% |
| Annual contribution to your 401(k) | $4,800 | $0 |
| Annual salary eaten up by taxes | $21,056 | $22,400 |
| Annual tax savings | $1,344 | $0 |
| Total annual savings: | $6,144 | $0 |
Tax benefits for you and your business:
$500
If this is your company’s first 401(k) plan, special business tax credits can offset your plan costs by up to $500 a year for the first three years.2
TAX DEDUCTIBLE
Plan expenses and matching employer contributions are tax-deductible.
$5,000
Plan participants can save up to $5,000 in federal income taxes.1
$17,000
A 401(k) plan allows maximum tax-deferred contributions up to $17,000 in 2012 and an additional $5,500 option for participants age 50 and over.3
$75
Plans start at just $75 a month with a one-time set-up fee.4
1 The amount of taxes saved depends on your federal and state personal income tax rates. 2012 contribution limit for tax-deferred funds into a 401(k) plan is $17,000 ($22,000 for those age 50 or older). Savings calculation assumes you are in the 28% tax bracket.
2 Your business must have at least one employee, other than you as the owner, who earns less than $115,000 a year to qualify for a tax credit. The tax credit is equal to 50% of administration and set-up charges for your 401(k) not to exceed $500 (www.irs.gov/pub/irs-utl/egtrra_law.pdf, p. 73).
3 2012 contribution limit tax-deferred into a 401(k) plan ($17,000 for 2012, plus $5,500 catch up for those age 50+).
4 Plans start at $75/month for up to 10 employees. There is a one-time $495 set-up fee: other company fees may apply. Offer Details
The initial term (term minimum) of this agreement is 18 months. After the initial 18-month term is met, services will automatically continue on a monthly basis until the client requests the termination of these services.
The client will experience a recurring monthly charge, billed automatically to client’s credit card or other preferred method of payment. Terms, conditions, features, availability, pricing, fees, service and support options subject to change without notice.
After the initial 18-month commitment, the client can discontinue services by contacting The Online 401(k) by calling 855.705.4357 or by e-mailing support@theonline401k.com.
The client must provide notice of cancellation to The Online 401(k) sixty days prior to termination. The Online 401(k) will charge a $600 fee for the process of either terminating the client’s plan or assistance in transferring the client’s plan assets to another provider. This covers the cost of reporting, additional communication and processing. This fee is a standard fee within the 401(k) industry. For The Online 401(k)’s full termination policy, please click here.
