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Defined benefits are part of your compensation in addition to the base salary, insurance coverage, vacation, sick leave, and retirement funding.
Defined pension plan, although rapidly disappearing, is your retirement pension once you are "vested", typically 3-5 years of employment. Defined contribution plan, or 401(K) in private sector, or 403(b) in education sector. 401(k) plan is funded by the employees on pretax dollars and therefore reduces the taxable income (say your base salary). If you contribute to the maximum dollar amount in 2018, this amounts to $18,000. If you are over the age of 50, you can contribute additional $6,000. Your employers can contribute up to 5-6% of your base salary to your 401(k). If you are in 25% tax bracket, your tax saving is $4,500 (0.25 X $18,000),
As bee pointed out, the HSA and FSA are also available. Since the medical insurance enrollment is upon us now, it is important to talk with your HR as soon as possible.
Comments
-FSA- Flexible Savings Account
-Health insurance Premium deduction for self employed.
-Tax Credits of all stripes
https://irs.gov/credits-deductions-for-individuals
-Municipal Bonds
living trust
Defined pension plan, although rapidly disappearing, is your retirement pension once you are "vested", typically 3-5 years of employment. Defined contribution plan, or 401(K) in private sector, or 403(b) in education sector. 401(k) plan is funded by the employees on pretax dollars and therefore reduces the taxable income (say your base salary). If you contribute to the maximum dollar amount in 2018, this amounts to $18,000. If you are over the age of 50, you can contribute additional $6,000. Your employers can contribute up to 5-6% of your base salary to your 401(k). If you are in 25% tax bracket, your tax saving is $4,500 (0.25 X $18,000),
As bee pointed out, the HSA and FSA are also available. Since the medical insurance enrollment is upon us now, it is important to talk with your HR as soon as possible.