Borrowing from your 401k to buy a car is a serious decision with potential consequences. It reduces your long-term retirement savings and potentially affects your future financial security. Additionally, borrowed funds used for non-retirement purposes may incur taxes and penalties. While it might provide short-term financial relief, it’s essential to consider the long-term impact on … Read more
Roth 401(k) contributions allow you to save money for retirement with tax-free growth. To calculate your Roth 401(k) contribution, you will need to know the annual contribution limit, which is set by the IRS. For 2023, the limit is $22,500 ($30,000 for those age 50 or older). Once you have determined the contribution limit, you … Read more
Consider rolling over your 401k to a Roth IRA if you anticipate being in a higher tax bracket in retirement. This move allows you to pay taxes on your 401k withdrawals now, while you’re likely in a lower bracket. When you withdraw from a Roth IRA in retirement, the funds will be tax-free, potentially saving … Read more
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