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Isn't there a 401k limit per year on how much you can do this? Like 18k or something. I can see people abusing this and putting million into the 401k tax free

• nerdwaller 9y ago
  Yes, for 2017 the limit is 18k . But it’s worth noting for those that may not know how a 401k works (I’m not suggesting that’s you) - it’s not “tax free”, it’s just deferred until withdrawn (for a traditional 401k, there is also a Roth variant like IRAs).
  • astura 9y ago
    Capital gains are tax free.
    • nerdwaller 9y ago
      True, as of current only distributions from the account are taxed (and are taxed at current income rates, what happened to make the account grow doesn't come into play). Good clarification!
• astura 9y ago
  $18k is the limit for individual contribution. Employers have a separate contribution limit, I think around $55k. So they can freely give each employee $55k worth of cash or stock and that employee can freely contribute an additional $18k of their own money. But, yes, as pointed out, you do pay taxes, but ONLY when withdraw from it, which you can do without a penalty when you reach a certain age. The capital gains are tax free. But I was saying distributing stock into a 401k is not a taxable event, not that you'd never pay taxes. It's not abusive to fill up your 401k, that's what it is there for.