What are the tax benefits of different retirement savings plans?

Different retirement savings plans offer different tax benefits.

401(k): Contributions made to a traditional 401(k) are made pretax, which means they lower your taxable income in the year you make them. Earnings within the 401(k) account are also taxdeferred, meaning you don't pay taxes on them until you withdraw the funds during retirement. Roth 401(k) contributions are made aftertax, so you don't get a tax deduction in the year you make them, but the earnings grow taxfree and qualified withdrawals are taxfree.

Traditional IRA: Contributions made to a traditional IRA are taxdeductible, meaning they lower your taxable income in the year you make them. Earnings within the account are also taxdeferred, meaning you don't pay taxes on them until you withdraw the funds during retirement.

Roth IRA: Contributions made to a Roth IRA are made aftertax, so you don't get a tax deduction in the year you make them, but the earnings grow taxfree and qualified withdrawals are taxfree.

Pension plans: Contributions made to a pension plan are typically made by your employer, and they are taxdeductible for the employer. Pension plans usually pay out a fixed amount of money to retirees each month, which is taxable as ordinary income.

Overall, retirement savings plans offer tax benefits that can help you save money on taxes while saving for retirement. However, the specific tax benefits will depend on the type of retirement savings plan you choose. It is important to consult with a financial advisor or tax professional to understand the tax implications of your retirement savings plan choices.