Hi Forum,
We are Canadian currently on TN visa , during last 12 months, we max. our 401K contribution based on IRA limit, but after did bit of research on what to do in the future, seems we would be likely transfer it to RRSP , so 25% withhold.
Compare to tax saving is less than 20%, are we doing it right?
Thanks,
401K and future action
Moderator: Mark T Serbinski CA CPA
You maxed out your 401(k) based on 401(k) limit, which is 18K, not IRA limit which is $5500, I presume.
You are corredct that saving 20% tax now only to pay MUCH more than 25% later when in Canada is not the best.
The better cours e is to use the Roth401(K) option that your employer provides, and leave it tax free forever. You don't save the 20% now, but never pay tax on that money or growth in futire.
You are corredct that saving 20% tax now only to pay MUCH more than 25% later when in Canada is not the best.
The better cours e is to use the Roth401(K) option that your employer provides, and leave it tax free forever. You don't save the 20% now, but never pay tax on that money or growth in futire.
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