You want to minimize your current tax bill by maximizing your contributions to your ________.

Question

Quizplus · Accepted Answer

Contributions to a 401k or 403b plan can be made on a pre-tax basis, which reduces your taxable income and ultimately lowers your tax bill. This is a more efficient way to minimize your tax bill compared to contributing to a taxable bond portfolio or taxable savings account, where you would have to pay taxes on the earnings. While Roth retirement plans are also tax-advantaged, contributions are made with after-tax dollars and do not provide an immediate reduction in taxable income.

You Want to Minimize Your Current Tax Bill by Maximizing