OVERVIEW Companies aren’t legally obligated to offer a 401k plan to their employees. However, companies that do offer a 401k plan are legally obligated to fairly offer them to any employee who is at least 21 years of age and has provided at least one year of service at the company. A frequently asked question […]
You’re allowed to contribute to both an employer-sponsored retirement (like a 401k or solo 401k plan) and an IRA (both Roth and traditional) in the same tax year. However, there are some instances where your IRA contributions can get restricted or lose the ability to receive a tax deduction. Are you eligible for a solo […]
Early withdrawals made from a 401k plan are subject to a 10% penalty plus income taxes on the amount drawn. If your plan provider enables loans as an option for participants, a 401k loan could be the better alternative to an early withdrawal if you’re in urgent need of emergency funds. What is a 401k loan? A […]
A 401k is typically one of the last places you want to withdraw money because they’re so tax-advantaged. You’re depleting money from an account that offers you tax-free compounding, deferred until retirement (or completely tax-free with a Roth 401k). When you take money out early (before the age of 59½) it’s regarded as a nonqualified […]
A 401k is an employer-sponsored retirement plan. Without an employer, you cannot participate in a traditional company 401k plan. However, there are some strong alternatives that offer even better benefits and tax-advantages than a normal 401k. Perhaps you’re already employed, but your company just doesn’t have a 401k plan that they offer to employees. 401k […]
BASIC WITHDRAWAL RULES OF A ROTH 401K A Roth 401k has slightly different withdrawal rules than a normal 401k. With a Roth 401k, you contribute to your account with after-tax dollars and withdrawals in retirement are completely tax-free. Like a traditional 401k, you must wait until you’re at least 59½ years old before you can take […]
Yes, contributions made to a traditional pre-tax 401k are tax deductible. The amount you contribute gets deducted from your taxable income for the tax year. For 2023, it’s possible to deduct up to $22,500 ($30,000 if age 50+) in taxable income through 401k contributions. However, it’s important to note that contributions made to a Roth […]
If you have assets in a 401k plan and are approaching retirement or considering leaving your employer, there are several options you can take. You can take a withdrawal, keep the old 401k (if your former employer allows it), or do a 401k rollover into an IRA or another 401k plan. What is a 401k […]
Most 401k plan providers will offer two different contribution options: Traditional pre-tax and Roth post-tax. Traditional pre-tax contributions are funded with pre-tax income, give you a tax deduction for the year, and grow tax-deferred. When you withdraw in retirement, it gets taxed as regular income. Roth post-tax contributions are funded with post-tax income, and don’t […]
