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Reply to "Sad, just had to cease contributions to my 401K in order to budget in daycare costs for new baby :("
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[quote=Anonymous]OP, aside from the recommendations on looking for ways to cut expenses, I would suggest you do a quick tax estimate. The contributions to your 401k plan lower your taxable wages so you pay less in income tax. If you drop your contribution you will pay more in taxes. At your combined income level, the dependent care deduction may not be enough of an offset, meaning you may pay more in Federal taxes then if you had kept or lowered your contribution. You do not want to be in a position where you are paying the government instead of yourself. You may find that you can decrease the amount withheld for taxes when you account for the new dependent, the 401k contribution, and daycare costs.[/quote]
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