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
. Understanding Rollovers in 401(k) Plans A 401(k) rollover is a process where you transfer funds from one retirement account to another. This can be done for several reasons, such as consolidating accounts, changing jobs, or adjusting your investment strategy. There are two main types of rollovers: direct rollovers and indirect rollovers. Direct rollover: With … Read more
At age 55, you have the option of accessing your 401k funds without facing the usual 10% early withdrawal penalty. This is known as the Rule of 55. However, it’s important to note that you must have left your job during or after the year you turned 55 to qualify. Additionally, you can only withdraw … Read more
401a and 401k plans are retirement savings accounts offered by employers. Both plans allow employees to contribute pre-tax dollars into their accounts, which means that the money is taken out of their paychecks before taxes are calculated. This can lead to significant tax savings, especially for high-income employees. However, there are some key differences between … Read more
Deciding whether to reduce 401k contributions during market downturns requires careful consideration. While it may be tempting to lower contributions to take advantage of lower stock prices, it’s important to remember that the primary goal of a 401k is long-term retirement savings. Reducing contributions now means having less money available for retirement later, even if … Read more
Withdrawing funds from a 401(k) account to help purchase a house is generally not recommended due to the potential tax implications. Withdrawals before the age of 59½ may incur a 10% early withdrawal penalty on top of regular income taxes. Additionally, the funds taken out of the account will not have time to grow tax-deferred, … Read more
Catch-up contributions are additional contributions that older employees can make to their 401k plans. These contributions allow them to save more for retirement and make up for any lost time. The catch-up contribution limit for 2023 is $7,500 for traditional and safe harbor 401(k) plans, and $1,000 for SIMPLE IRAs. Employees who are age 50 … Read more