The De Minimis Safe Harbor is a provision in the Internal Revenue Code (IRC) that allows employers to make “forced contributions” to a 401(k) plan, even if the contributions exceed the employee’s elective deferrals. These contributions are not considered elective deferrals and therefore do not count against the employee’s annual deferral limit. In order to … Read more
The choice between a 401k and Roth depends on your current financial situation and long-term retirement goals. A 401k allows you to contribute pre-tax dollars, reducing your current income tax but paying taxes upon withdrawal in retirement. This can be beneficial if you expect to be in a lower tax bracket in retirement. In contrast, … Read more
Consider your financial goals, risk tolerance, and investment horizon when deciding whether to reallocate your 401k. If your retirement goals have changed, or if you’re approaching retirement, you may need to adjust your asset allocation. Also, if your risk tolerance has changed, you may want to adjust your portfolio to match your comfort level. Finally, … Read more
Isha Cref is a 403(b) retirement savings plan offered by TIAA, a financial services company. It is designed specifically for employees of public schools, colleges, and other tax-exempt organizations. The 403(b) plan is similar to a 401(k) plan, but it has some different rules and regulations. For example, 403(b) plans have higher contribution limits than … Read more
サス ¥ # Budgeting Rule Explained The 50/30/20 budgeting rule is a simple and effective way to manage your finances. It allocates your income into three categories: Needs (50%): Essential expenses like housing, food, and transportation Wants (30%): Non-essential expenses like entertainment, dining out, and travel Savings (20%): Long-term financial goals like retirement, emergencies, and … Read more
Nursing homes are not permitted to confiscate your spouse’s 401(k) plans to pay for care. The 401(k) plan is considered a personal retirement account, a form of asset protection that generally cannot be used to pay for nursing home costs. The law states that nursing homes must first seek payment from Medicaid, Medicare, or your … Read more
A permissible withdrawal from a 401k plan allows participants to withdraw money without incurring an early withdrawal penalty. This can be done for a variety of reasons, including: age, disability, death, qualified expenses, and military service. Participants who withdraw funds for reasons other than those listed above may be subject to a 10% early withdrawal … Read more
Taking money out of your 401k before retirement is possible, but it can have financial consequences. Withdrawing funds early triggers income tax and a 10% penalty (if you’re under 59½). Exceptions exist for certain hardship situations, like medical expenses or a down payment on a primary residence. It’s crucial to carefully consider the long-term impact … Read more
If you exceed the 401k contribution limit, the overage is taxed at 6%, plus another 1% tax for each year it remains in the account. The excess contributions may also be subject to income tax and an additional 10% early withdrawal penalty if you access them before age 59½. To avoid these penalties, you should … Read more
Normally, withdrawing funds from a 401(k) plan before age 59½ triggers a 10% penalty tax. However, there are exceptions to this rule, including if the withdrawal is used to cover qualified expenses. One such expense is financial hardship. To establish hardship, you must demonstrate that you have an immediate and heavy financial need that cannot … Read more