Bye Bye Tax Breaks

I got a nice letter from my employer yesterday.  It seems they’ve decided to disband our 401(k) program since I am now the only one left taking advantage of it.  I work for a very small firm, but I didn’t realize that there were only two of us taking advantage of this terrific tax-deferred savings plan.  And now the other employee needs to save all his money in the here and now so that they can buy a bigger house.  And now I have to shop around and figure out where I want to roll this little retirement savings into.

I had been signed up to put the max 15% of my pay into my 401(k) while my employer would match my contributions up to a max of 3%.  If you can afford to do so, it’s best to set aside the maximum amount that you are allowed.  Not only does it build up your retirement savings quicker, the money put aside is not taxed now by the IRS.  Especially if you’re above the income level where you can contribute to a deductible IRA, this is a powerful tax incentive.  I tell all my tax clients to take advantage of it if offered by their employer.  Sometimes it can even lower your AGI to the point that you can take advantage of education credits or other credits that you would ordinarily not be eligible to claim.  It allowed us to claim more of the massive expenses Big Daddy incurs in his job (because “Satan” pays none of his employees’ expenses).  And now I won’t have that.

This came right on the heels of them having to cancel my eyecare insurance.  This was also taken out pre-tax.  My employers were even awesome enough to pay the portion I usually pay (for my other family members) themselves during the months I didn’t work.  Thank God we still have the dental.  Big Daddy uses that one BIG time.

My employer will make up the 3% contribution in the form of a 3% wage increase.  And I’m a good saver on my own.  But I better warn Big Daddy we won’t be getting the tax refunds we’re accustomed to. 😦

3 Responses to “Bye Bye Tax Breaks”

  1. 1 Pastor John August 1, 2008 at 11:42 pm

    I didn’t know you blogged in Greek…LOL

  2. 2 mamaneeds2rant August 1, 2008 at 11:47 pm

    I think you mean “Geek”? haha

  3. 3 Chris August 2, 2008 at 11:55 am

    Lawl. My mom, the accounting nerd. ❤

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August 2008
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