Does A 401K Contribution Reduce AGI?
- 47 POINTSview profileKevin HaneyA.S.K. Benefit Solutions, New JerseyPre tax payroll contributions used to fund your 401K reduce the amount of income reported on your W2. Your Adjusted Gross Income (AGI) is your gross income minus adjustments. Since pre tax elections reduce reported income, it also reduces AGI. Your AGI is used to determine the amount of qualified medical expenses you can deduct, and may apply to other tax trigger amounts.Answered on July 23, 2014flag this answer
- 21750 POINTSview profileJim WinklerCEO/Owner, Winkler Financial Group, Houston, TexasThat is a great question! I am pleased to hear you ask about your 401k, planning for your retirement is a good thing, and I wish more people were doing it. If your contributions are being made pre-tax, then yes, your Gross Income will be adjusted downward for the amount of those contributions. If they are made after-tax, then they obviously will not. I hope that helps, thanks for asking!Answered on July 23, 2014flag this answer
Did you find these answers helpful?
Yes
No
Go!
Add Your Answer To This Question
You must be logged in to add your answer.