As you approach 40, your 401(k) should generally become less aggressive to account for the closer proximity to retirement. The optimal asset allocation depends on your individual circumstances, risk tolerance, and investment goals. A good rule of thumb is to gradually shift a portion of your portfolio towards more conservative investments such as bonds as … Read more
: You can convert your pre-tax 401k or traditional IRA funds to a Roth IRA, potentially offering several benefits. Roth IRAs grow tax-free, meaning qualified withdrawals in retirement are not taxed again. However, this conversion, also known as a rollover, is subject to income tax and potentially a 10% early withdrawal penalty if you’re under … Read more
The number of 401k rollovers you can make per year is limited. In most cases, you can only make one rollover per 365-day period. However, there are some exceptions to this rule. For example, you can make a direct rollover from one employer-sponsored retirement plan to another without any limit on the number of times … Read more
Consider switching from a Roth 401k to a traditional 401k when you anticipate being in a higher tax bracket during retirement than you are now. This is because Roth contributions are made post-tax, meaning your contributions are not taxed, but withdrawals in retirement are subject to income tax. In contrast, traditional 401k contributions are made … Read more
Thrift Savings Plan (TSP) and 401(k) plans share similarities in purpose and tax benefits, but there are key distinctions between the two. The TSP is a retirement savings plan specifically designed for federal employees, while 401(k) plans are offered by private employers. Both plans allow participants to contribute pre-tax dollars and enjoy tax-deferred growth until … Read more
If you contribute more than the annual limit to your 401(k) plan, the excess amount will be subject to an excise tax. The tax is 6% per year for each year that the excess amount remains in the plan. Additionally, the IRS may also impose a 10% early withdrawal penalty if you take the excess … Read more
It’s important to be aware that cybercriminals can use sophisticated techniques to steal your 401k savings. They may use phishing emails or fraudulent investment schemes to trick you into giving up your personal information or signing over control of your account. They can also employ advanced technology to intercept or alter communications between you and … Read more
The 401(k) contribution limit includes both employee and employer contributions. The employee contribution limit is the maximum amount of money that an employee can contribute to their 401(k) account. The employer contribution limit is the maximum amount of money that an employer can contribute to an employee’s 401(k) account. The total contribution limit for 2023 … Read more
When you roll over funds from a 401k to an IRA, it doesn’t count as a contribution. This is because the funds were already contributed when they were added to your 401k. Rolling over these funds simply moves them from one retirement account to another. As a result, you don’t need to pay any additional … Read more
If you’re employed and want to save for retirement, you can contribute to both a 401k and a SEP IRA. A 401k is an employer-sponsored retirement plan that allows you to save pre-tax dollars. Your employer may also make matching contributions, which can help you save even more. A SEP IRA is a simplified employee … Read more