Calculating the maximum 401(k) contribution involves understanding the annual contribution limits set by the Internal Revenue Service (IRS). For 2023, the contribution limit for individuals is $22,500, and for those who are 50 years or older, there is a catch-up contribution limit of $7,500, bringing the total to $30,000. To calculate your maximum contribution, you … Read more
In California, when a couple divorces, their 401(k) accounts need to be divided equitably. This is usually done through a Qualified Domestic Relations Order (QDRO), which is a court order that instructs the plan administrator to split the account. The QDRO will specify how much of the account each spouse is entitled to receive. If … Read more
401(k) plans are retirement savings accounts that offer tax benefits to employees. In general, 401(k) plans are protected from creditors in the event of a lawsuit. This means that if you are sued, your 401(k) savings will not be seized to satisfy the judgment. However, there are some exceptions to this rule. For example, if … Read more
When it comes to a 401k rollover check, the question of whether or not to sign the back arises. This is an important decision that requires a careful understanding of the implications. In general, it is advisable to sign the back of the check. This is because the endorsement acts as a guarantee that you … Read more
If you’re wondering if you can roll over your 401(k) to a Roth IRA, the answer is yes. A Roth IRA is a type of individual retirement account that allows you to contribute after-tax dollars. This means that you won’t pay taxes on the money when you contribute it or when you withdraw it in … Read more
Market crashes can trigger concerns about retirement savings, especially if you have a 401k. During a market downturn, the value of investments in your 401k may decline. However, it’s crucial to remember that 401k investments are long-term, so these short-term fluctuations can be part of the investment journey. The key is to stay invested and … Read more
Generally, you can’t withdraw from your 401(k) without paying taxes and penalties. There are exceptions, such as if you’re over 59½, disabled, or experiencing a financial hardship. If you withdraw before age 59½, you’ll pay income tax on the withdrawal and an additional 10% early withdrawal penalty. If you’re withdrawing due to financial hardship, you … Read more
401a and 401k plans are both retirement savings plans offered by employers. Both plans allow employees to contribute pre-tax dollars to their accounts, reducing their taxable income in the year the contributions are made. 401a plans are available to employees of public schools and certain other tax-exempt organizations, while 401k plans are available to employees … Read more
Consider reducing your 401k contributions if you’re close to retirement and want to minimize taxes on your withdrawals. Withdrawing from a traditional 401k incurs income tax, but qualified withdrawals from a Roth 401k are tax-free. Shifting contributions to a Roth 401k allows for tax-free growth and withdrawals. If you have high-interest debt or need immediate … Read more
When you take a loan from your 401k, it is considered a distribution, meaning you must pay income tax on the money you receive. However, if you repay the loan before the end of the year, you may be able to deduct the amount you repaid on your taxes. This is because the money you … Read more