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Chapter 6. Saving Pre-Tax or After-Tax—D... > Withdrawing After-Tax Money - Pg. 67

Saving Pre-Tax or After-Tax--Does It Really Matter? 67 Terms to Know Tax deferred vs. tax free:What's the difference? When you defer taxes, you don't pay them today but will pay them eventually. When it comes time to pay taxes, you hope you are in a lower tax bracket than today. Taxfree means ... taxfree. Don't pay taxes today, don't have to pay them tomorrow. So why then do people choose after-tax when they could go pre-tax? Did the devil make them do it? There are some particular reasons why people contribute after-tax. Save More and Have the Same Take-Home Pay Another advantage to saving pre-tax (get the feeling we like pre-tax?) is that you can actually save more money from each pay check ... and keep your take-home pay the same. Here's how it works in John's case: Gross Income Pre-Tax Sav- ings Adjusted Gross Tax Paid (%) After-Tax Savings Take-Home Pay