In this episode, Dan & Ian debate the most well-known retirement savings plan. 401k's are employer sponsored plans that allow you to contribute pre-tax dollars to a retirement plan. This plan is either actively or passively managed by your employer who chooses the investments for you. Since the money is deducted from your paycheck, it reduces your taxable income. Below is some additional information about 401ks. 

1. 2020 Contribution Limits
-19,500 for under the age of 50
-26,000 for those 50 and up
If your employer matches as well the max amount that can be put in is:
-58,000 for under age 50, or 100% of employee compensation whichever is lower
-64,500 for over the age of 50, or 100% of employee compensation whichever is lower

2. Option of Traditional or Roth 401K:
-Traditional allows you to reduce your taxable income now and therefore decrease the amount that you will owe in taxes: In traditional you pay all the tax on the back end
-Roth is contributed with after-tax dollars and then is not taxed on its withdrawal: In Roth you do not pay taxes on earnings or contributions when you withdrawal

Follow & Subscribe to The Small Business Experience:
Youtube: https://www.youtube.com/channel/UCgCgrWab2pDhnQ3pZvbI0Zw
Instagram: https://www.instagram.com/smallbusinessexperience
Facebook: https://www.facebook.com/The-Small-Business-Experience-101691538462054
Twitter: https://twitter.com/TheSmallBizExp
LinkedIn: https://www.linkedin.com/company/70527961/admin/
Buzzsprout: https://thesmallbusinessexperience.buzzsprout.com