Question

If you use pre-taxed salary reduction, how hell have they worked out for you, and will you use them again next year?

Answer 1

Pre-tax reduction on salary actually reduces taxable salary.

It helps the taxpayer to pay lower amount of tax now but not so helpful in the long-run. There are so many retirement benefits calculated on taxable salary, like Social security tax, Medicare tax, other premium, etc. If the taxable salary is low, such deduction would also be low and the total benefit amount at the time of retirement may not be handsome; this is a serious loss in future, although the taxpayer pays lower income tax now.

It should not be used again in the next-year, since it is not so helpful for the accumulation of fund for retirement; therefore, it is better to pay high tax now and keep the funding big for future.