Rolling over a 401(k) to a Roth IRA can be a smart financial move for those looking to potentially boost their retirement savings. However, it’s important to understand the differences between the two accounts and the potential tax implications involved. A 401(k) is an employer-sponsored retirement plan that offers tax-deferred growth, meaning you don’t pay … Read more
The annual contribution limit for a 401(k) plan is the maximum amount of money that you can save into your account each year. This limit is set by the IRS and is subject to change each year. For 2023, the annual contribution limit for a 401(k) plan is $22,500. This limit is up from $20,500 … Read more
Withdrawing funds from your 401(k) before you reach the age of 59½ can result in substantial penalties. However, there are a few exceptions to this rule. You may be able to withdraw funds if you: experience a financial hardship, meet certain medical expenses, pay for higher education, or cover the costs of a first-time home … Read more
Borrowing from a 401k might seem like a convenient option in challenging financial times, but it should be approached with caution. The money in a 401k is meant for retirement, and taking a loan can significantly impact future financial security. Interest charges and fees associated with the loan can add to the overall cost. Additionally, … Read more
If you’ve left your job and are wondering about your 401(k) options, you have several choices. Generally, you can keep the account with your former employer’s plan, roll it over into an Individual Retirement Account (IRA), or take a withdrawal. However, if you take a withdrawal before age 59½, you’ll usually have to pay income … Read more
401(k) contributions reduce your taxable income, which also reduces the amount of FICA taxes (Social Security and Medicare) you pay. FICA taxes are not withheld from 401(k) contributions, so you do not pay FICA taxes on the money that you contribute to your 401(k). However, you will pay FICA taxes on the money that you … Read more
Consider these factors when deciding whether to roll over your 401(k): Investment options and fees. Will the new plan offer better investment choices with lower fees? Tax implications. Rolling over to a traditional IRA delays taxes until withdrawal, while rolling over to a Roth IRA means paying taxes now but not in retirement. Your financial … Read more
If you need access to your 401k savings before reaching retirement age, there are options available. One is to take a loan against your 401k, which allows you to borrow up to half of your vested balance, typically with a repayment period of five years. Another option is to make a hardship withdrawal. This requires … Read more
Matches on Do 401k aren’t included in the annual contribution limits. This distinction exists because Do 401k matches are considered employer contributions, not employee contributions. As such, they don’t count towards the annual limit on employee contributions, which is set by the IRS. That means you can contribute up to the annual limit on employee … Read more
Understanding the vesting period in a 401(k) plan is crucial. Vesting refers to how long it takes for you to fully own the contributions made to your account by your employer. During this period, a portion of the contributions may be forfeited if you leave your job before the vesting period ends. The length of … Read more