Alex works for a company with a 401(k) plan- He currently earns $80,000 in gross salary and contributes 8% of his gross salary into his 401(k) account- If his marginal tax rate is 33%, how much income tax liability is he saving by participating in his 401(k)?

Retirement planning refers to financial strategies of saving, investments, and ultimately distributing money meant to sustain oneself during retirement. Many popular investment vehicles, such as individual retirement accounts (IRAs) and 401(k)s, allow retirement savers to grow their money with certain tax advantages.