To make a wise decision about your 401k contributions, consider your financial goals, risk tolerance, and the matching funds offered by your employer. Aim for a contribution rate that maximizes the employer match, initially. Gradually increase your contributions as your financial situation improves, aiming for a total contribution of 10-15% of your annual income, including … Read more
When you change jobs, you can often roll over your old 401k into an IRA, which gives you more flexibility and investment options. To do this, you’ll need to contact the administrator of your old 401k plan and request a rollover. They will then send you a check or transfer the money directly to the … Read more
Rolling over a 401k to an IRA is a way to transfer your retirement savings from an employer-sponsored plan to an individual retirement account. The process involves requesting a distribution from your 401k and using the funds to fund an IRA. It’s important to note that there are different types of IRAs, such as traditional … Read more
Employer matching contributions are a great way to save for retirement, as they essentially give you free money. But do they count towards your 401k limit? The answer is yes, they do. The annual contribution limit for 401k plans is $20,500 in 2023 ($27,000 for those age 50 and older). This limit includes both your … Read more
Generally, funds from a Simplified Employee Pension (SEP) IRA can be rolled over into a 401(k) plan, enabling consolidation of retirement savings. The process involves transferring the SEP IRA assets directly to the 401(k) account. However, it’s important to note that the 401(k) plan must allow for rollovers from SEP IRAs. Additionally, tax implications may … Read more
Withdrawing funds from a 401(k) plan before age 59½ typically incurs a 10% early withdrawal penalty. However, there are certain exceptions that allow you to access your funds without penalty, including: * **Age 55 or older and leaving your job:** If you leave your job after turning 55, you can withdraw funds from your 401(k) … Read more
When you take a loan from your 401(k) account, you essentially borrow money from yourself. Instead of earning interest on the borrowed funds, that interest is credited to your loan balance. This means that you are effectively paying interest to yourself, rather than to a lender. While this can be advantageous in some cases, it … Read more
Fidelity 401(k) plans allow participants to take out loans to cover financial emergencies or other needs. The number of loans you can have at any one time will depend on the terms of your plan. Some plans may allow you to have multiple loans outstanding, while others may limit you to just one loan at … Read more
401k contributions are deducted from an employee’s pretax income, reducing their taxable income and the amount of taxes owed. However, these contributions do not count as earned income for the purposes of calculating Social Security benefits or other government programs that use earned income as a factor. Earned income is generally defined as wages, salaries, … Read more
A 401k expense ratio is a measure of the annual costs associated with managing a 401k plan. It’s expressed as a percentage of the total plan assets, and it covers expenses such as administration fees, recordkeeping costs, and investment management fees. A good 401k expense ratio is typically lower than 1%. This means that for … Read more