/biz/ If I invest all of my salary into an untaxed 401k and quit

>>1968015

It is still considered income when it's withdrawn and therefore you would be required to pay any applicable taxes based the bracket you fall into. In addition, because you have not yet reached retirement age, you will pay a 10% penalty on top of the taxes.

Also; The maximum 401k contribution amount for you is likely about 18,000.

Also also; couldn't you have just done a google search?

File: 1209603955569.jpg (57KB, 747x580px) Image search: [Google]

57KB, 747x580px

>>1968094
I did but thought only current earned income would determine tax bracket.

thank you

>>1968015
Gotta pay the taxes and the 10%.

But if you only took out a small amount each year, then your income would be smaller I guess so you wouldn't be paying 28% on it, only whatever your tax bracket ends up being for that year.

>>1968103
>only current earned income

What did he mean by this?

>>1968167
>What did he mean by this?
"Earned income" means money you received from employment, wages, salary, self-employment income, etc. Earned income is also the only type of income that can be put into a 401k/IRA.

Earned income is part of a larger category called "ordinary income" (generally abbreviated as "OI"). OI includes your earned income, plus most other forms of income like profits from partnerships, rental income, lottery winnings, and alimony. OI also includes things like most bank interest, short term capital gains, and some dividends.

The well-known tax brackets that top out at 39.6% are for calculating the tax owed on OI.

Lastly, there are long term capital gains (LTCG) + qualified dividends, which are taxed using a completely different bracket that tops out at 20% (plus 3.8%, possibly).