Calculating Required Minimum Distributions (RMDs) for 401(k) accounts is important to avoid penalties. The RMD is the minimum amount you must withdraw from your account each year once you reach age 72. Failure to withdraw the RMD can result in a penalty of 50% of the amount that should have been withdrawn. To calculate your … Read more
Withdrawing money from your 401(k) account before you reach retirement age can have financial consequences. You may have to pay income taxes on the amount you withdraw, and you may also face a 10% early withdrawal penalty. The early withdrawal penalty is a tax that is applied to the amount you withdraw from your 401(k) … Read more
To calculate your Required Minimum Distribution (RMD) from a 401(k) account, you’ll need to know the balance as of December 31 of the previous year and your age on April 1 of the current year. The RMD is calculated by dividing your account balance by the applicable distribution period, which is determined by your age. … Read more
Divorce is a significant life event that can have a substantial impact on an individual’s financial situation. Divorce can lead to a loss of income, increased expenses, and the need to divide assets. As a result, divorce is often considered a hardship for purposes of withdrawing funds from a 401(k) plan. This withdrawal option allows … Read more
When you withdraw money from your 401(k) account, it is subject to taxes and may also be subject to a 10% early withdrawal penalty if you are under age 59½. The amount of taxes you pay will depend on whether you take a traditional or a Roth withdrawal. Traditional 401(k) withdrawals are taxed as ordinary … Read more
IULs and 401ks are both retirement savings accounts, but they have some important differences. An IUL is a type of life insurance policy that offers a cash value account that grows at a fixed rate. The cash value account is invested in stocks and bonds, and the growth rate is determined by the insurance company. … Read more
Forfeiture in a 401k occurs when an individual fails to satisfy the vesting requirement and loses their employer-provided contributions. Vesting schedules vary, but typically the employer’s contributions become fully vested after a certain number of years of service. If the employee leaves their job before becoming fully vested, they may lose the employer’s contributions that … Read more
401k contributions made by employees can lower their modified adjusted gross income (MAGI). This is important because MAGI is used to determine eligibility for certain government programs and tax credits. By reducing MAGI, individuals may qualify for higher benefits or lower tax liability. For instance, lowering MAGI can increase eligibility for Medicaid, the Children’s Health … Read more
A contingent beneficiary for a 401(k) plan is a person or entity that will receive the remaining account balance if the primary beneficiary passes away before the account owner. Designating a contingent beneficiary ensures that your retirement savings will be distributed according to your wishes if the primary beneficiary predeceases you. It’s important to review … Read more
401k contributions lower an individual’s adjusted gross income (AGI) by reducing their taxable income. AGI is the amount of income subject to federal income tax, and contributions to a 401k plan are not included in this calculation. By making 401k contributions, individuals can reduce their taxable income, potentially resulting in lower income tax liability. This … Read more