Withdrawing money from your 401k to finance a car purchase is generally not advisable. While it may be tempting to access your retirement savings for immediate needs, it can have significant long-term financial implications. Withdrawing funds before retirement incurs taxes and penalties, reducing your future retirement income. Additionally, taking money out of your 401k may … Read more
Deciding whether to switch your 401(k) to a Roth IRA requires careful consideration. A Roth IRA offers tax-free growth and withdrawals in retirement, but you contribute after-tax dollars now. On the other hand, a 401(k) provides tax-deferred growth, meaning you’ll pay taxes on withdrawals during retirement. If you expect to be in a higher tax … Read more
It’s possible to roll over your 401(k) while you’re still actively employed. A rollover involves transferring funds from your existing 401(k) to a new account, such as an Individual Retirement Account (IRA) or a different 401(k) plan. There are various reasons why you might consider doing this, such as consolidating your retirement savings, gaining access … Read more
The maximum amount you can contribute to your 401(k) plan is determined by the Internal Revenue Service (IRS) each year. In 2023, the maximum contribution limit for individuals is $22,500, with an additional catch-up contribution limit of $7,500 for individuals age 50 and older. However, these limits do not include employer contributions. Employers can contribute … Read more
In Pennsylvania, contributions made to 401(k) plans are not subject to state income tax when the money is deposited. However, when you withdraw the funds during retirement, they are taxed as ordinary income. Additionally, any earnings or interest that accumulates within the 401(k) plan are exempt from state income tax while in the account. This … Read more
Utilizing a 401k as collateral for a loan is not typically allowed. This type of retirement account is protected by federal law, preventing you from using it as collateral for loans. The primary purpose of 401ks is to provide individuals with a means to save for future retirement needs, and allowing its use as collateral … Read more
The Internal Revenue Service (IRS) sets limits on the amount of money that individuals can contribute to their 401(k) retirement accounts each year. These limits apply to both employee contributions and employer matching contributions. The limit for employee contributions is $22,500 for 2023, and $30,000 for individuals who are age 50 or older. The limit … Read more
The 401(k) contribution limit includes both employee contributions and employer matching funds. An employer match is a certain amount of money that the employer contributes to an employee’s 401(k) account for every dollar that the employee contributes. The contribution limit for 2023 is $22,500, and the catch-up contribution limit for employees aged 50 and older … Read more
Withdrawing money from your 401(k) account before you reach the age of 59 1/2 typically triggers a 10% penalty tax. However, there are some exceptions to this rule, such as if you need the money for certain expenses, including: a down payment on a home, qualified educational expenses, or medical expenses. If you meet the … Read more
When you take money out of your 401k before reaching age 59 1/2, you’ll face a 10% penalty tax, in addition to income taxes. However, if you wait until you turn 59 1/2 to withdraw from your 401k, you can avoid the penalty. The tax on 401k withdrawals after 59 1/2 is simply your regular … Read more