Quote:
Originally Posted by pilotbob
What do you mean? Most retirement funds are tax free in the US too.
Harry didn't really man that the UK contributes to the fund.... although it did sound like he was saying that, I'm sure that's not what he meant.
BOb
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I get what he meant.
If you are paying 40% tax then each dollar you put into a fund "pre-tax" is sort of like the government giving you 40 cents.
I'm in Australia though. Here in Australia it isn't tax free, only a reduced rate. We still pay 15% tax on contributions, even the compulsory contributions made by the employer I think.
Since I pay around 30% tax it would be an advantage to put some dollars into a fund "pre-tax" and only pay 15% tax on those dollars. The downside is not being able to get the money again for 30 years, paying big "management fees" and the fact that the Aussie government seems to continually change the rules on retirement funds. All that means, for me personally, I don't see the advantage of paying 15% less tax as offsetting all those negatives.
Cheers,
PKFFW