A possible advantage of participating in your employer’s retirement plan is that your taxable income is reduced.
Explanation:
The amount that you contribute to your retirement plan sponsored by the employer is secluded from the tax slab of the state and federal government.
This amount, though having been secluded from the tax slab, is still deemed as legal because the laws pertaining to retirement plans allow for such a provision.
If your taxable income for the year is $40,000 and you choose to contribute $3000 to the employer sponsored retirement plan, the tax would then we calculated only on the remaining $37,000 of your income.
