When calculating the annual 401(k) contribution limit, it’s important to understand whether or not employer matching contributions count towards this limit. The answer is yes, employer matching contributions do count towards the limit. This means that the total amount you can contribute to your 401(k) plan, including both your own contributions and any matching contributions … Read more
The required minimum distribution (RMD) for a 401k is the minimum amount that an individual must withdraw from their 401k account each year once they reach age 72. The RMD is calculated using a formula that takes into account the individual’s account balance as of December 31 of the preceding year and their age. The … Read more
When considering whether to consolidate your 401k accounts, it’s crucial to weigh the pros and cons. By merging multiple accounts into one, you can simplify management, reduce fees, and potentially increase investment options. However, consolidation may also limit your flexibility, as you consolidate, you give up the ability to manage each account individually. Additionally, it’s … Read more
When facing financial hardship, certain circumstances allow you to access funds from your 401(k) retirement account through a hardship withdrawal. These situations often include medical expenses, educational costs, funeral expenses for a family member, and certain housing expenses. To qualify, you must demonstrate that the withdrawal is necessary to meet the hardship, other resources are … Read more
Vested Balance 401k refers to the portion of your retirement savings account in a 401k plan that you have a legal right to keep, even if you leave your current job. It’s the amount of money that has already been contributed to your account by your employer and yourself, minus any withdrawals you’ve made. The … Read more
Rebalancing a 401k typically involves adjusting the asset allocation to align with your investment goals and risk tolerance. Depending on your 401k plan and the services offered by your plan administrator, there may be associated costs for rebalancing. Some plans charge a per-trade fee, which can add up if you make frequent adjustments. Others may … Read more
A vested balance in a 401k refers to the portion of your retirement account that belongs to you and cannot be forfeited if you leave your job. Essentially, it’s the amount you have earned and own regardless of how long you stay with your employer. Think of it as your “locked-in” savings that you can … Read more
If you need to take a break from contributing to your 401k, you can pause your contributions. This means that you will stop making payments into your 401k account, but you will still be able to access the money that you have already contributed. To pause your contributions, you will need to contact your 401k … Read more
When faced with financial emergencies, you may consider taking a hardship withdrawal from your 401(k) plan. This involves withdrawing funds before you reach the standard retirement age of 59½. Keep in mind that doing so may come with tax implications and potential penalties. To initiate a hardship withdrawal, you’ll need to document your financial hardship … Read more
Severance pay, provided as a lump sum upon termination of employment, may qualify as eligible compensation for 401(k) plan contributions if it meets certain criteria set by the Internal Revenue Service (IRS). The IRS deems severance pay as “wages” for the purposes of 401(k) eligibility if it is paid under a formal plan that meets … Read more