I have been able to max my 401k contribution every year for a few years (building early, although I am 33 now, but single). Since last year, I get a little bonus, and obviously, the taxes are high. My employer defaulted 401k contribution for the bonus at the same rate as my regular contribution. I read everywhere that you can increase your annual contribution for the bonus, and keep most change in your 401k (reducing my taxes). With that said, I had the following in mind – put 75% of the bonus into 401k (change contribution around the time I receive the bonus), and reduce my monthly contribution (to not exceed the annual limit). Is that going to provide any tax advantage over what I am currently doing? I did the math, it made sense if I was not maxing the annual limit (and later did not have to reduce my bi-weekly contribution). Any thoughts/suggestions is greatly appreciated. Thanks in advance.
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