To calculate your Solo 401k contribution, you need to consider your earned income, which is your net income from self-employment. You can contribute up to the lesser of 100% of your net income or the annual contribution limit set by the IRS. The contribution limit for 2023 is $66,000, and it includes both employee and … Read more
Withdrawing funds from your 401(k) before you reach age 59½ typically incurs a 10% penalty from the IRS. This penalty applies to the taxable portion of the withdrawal and is in addition to any income tax you may owe. For example, if you withdraw $10,000 from your 401(k) before age 59½, you could face a … Read more
A 401(k) and a Roth IRA are both retirement savings accounts, but they have different tax treatments. With a 401(k), you contribute pre-tax dollars, meaning that you don’t pay taxes on the money until you withdraw it in retirement. With a Roth IRA, you contribute after-tax dollars, but you don’t pay taxes on the money … Read more
401(k) accounts are retirement savings accounts offered by employers, and the money in these accounts is invested in a variety of assets, such as stocks, bonds, and mutual funds. However, unlike bank deposits, these assets are not FDIC-insured. The FDIC is a federal agency that insures deposits up to $250,000 at FDIC-member banks, and this … Read more
Employer matching contributions to a Roth 401(k) plan do not count toward the annual contribution limit for employees. The contribution limit for Roth 401(k) plans in 2023 is $22,500 ($30,000 for those age 50 and older). This means that employees can contribute up to $22,500 ($30,000 for those age 50 and older) of their own … Read more
SEP IRAs and solo 401(k)s are both retirement savings plans designed for self-employed individuals and small business owners. SEP IRAs are simpler to set up and have lower administrative costs, but contributions are made on a pre-tax basis, reducing current income. Solo 401(k)s offer higher contribution limits and more investment options, but they require more … Read more
If you’re wondering if you can move your 401(k) money to a Simplified Employee Pension (SEP) IRA, the answer is yes. A 401(k) rollover to a SEP IRA can be a smart financial move, especially if you’re self-employed or own a small business. By rolling over your 401(k) funds, you can consolidate your retirement savings … Read more
. Understanding Rollovers in 401(k) Plans A 401(k) rollover is a process where you transfer funds from one retirement account to another. This can be done for several reasons, such as consolidating accounts, changing jobs, or adjusting your investment strategy. There are two main types of rollovers: direct rollovers and indirect rollovers. Direct rollover: With … Read more
At age 55, you have the option of accessing your 401k funds without facing the usual 10% early withdrawal penalty. This is known as the Rule of 55. However, it’s important to note that you must have left your job during or after the year you turned 55 to qualify. Additionally, you can only withdraw … Read more
401a and 401k plans are retirement savings accounts offered by employers. Both plans allow employees to contribute pre-tax dollars into their accounts, which means that the money is taken out of their paychecks before taxes are calculated. This can lead to significant tax savings, especially for high-income employees. However, there are some key differences between … Read more