401(k) FAQs

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In the event of a divorce, taking steps to safeguard your 401(k) is crucial. One essential strategy is to review your plan documents carefully. Your plan may allow you to make a “Qualified Domestic Relations Order” (QDRO), which legally assigns a portion of your 401(k) to your spouse. This option allows you to maintain control … Read more

After maximizing contributions to 401(k) and Roth IRA accounts, consider diversifying your portfolio with other long-term investment strategies. Individual stocks or mutual funds allow you to potentially grow your wealth through market returns. Real estate investments, such as rental properties or REITs, can provide passive income and potential appreciation. Additionally, you may consider alternative investments … Read more

Moving abroad can impact your 401(k) retirement savings. In most cases, you can keep your account, but there may be tax implications. If you withdraw funds before age 59½, you could face income and early withdrawal penalties. You may also have to pay foreign taxes on withdrawals. Leaving your 401(k) invested can allow for continued … Read more

Withdrawing funds from a 401(k) before reaching age 59½ typically triggers a 10% penalty. However, there are exceptions to this rule. Firstly, you can access funds penalty-free if you’re over 59½ and have separated from your employer. You can also avoid the penalty if you take substantially equal periodic payments over your life expectancy or … Read more

Roth 401(k)s offer significant tax benefits compared to traditional 401(k)s. Contributions to a Roth 401(k) are made with after-tax dollars, meaning they are not subject to federal income tax when you make them. However, your investment earnings grow tax-free, and you can withdraw your money tax-free in retirement. In contrast, traditional 401(k) contributions are made … Read more

When an employer matches 401k, they contribute an amount of money to the employee’s retirement account for every dollar the employee contributes. This can be a great way to save for retirement, as it allows employees to take advantage of their employer’s contribution. For example, if an employer matches 50% of employee contributions, an employee … Read more

Rolling over funds from a Simple IRA to a 401(k) is possible under certain circumstances. Generally, you can only roll over funds if you leave your job and the Simple IRA is terminated. The funds must be directly transferred from the Simple IRA to the 401(k) and must be rolled over within 60 days of … Read more

401(k) vesting refers to the process by which you gain ownership of employer contributions to your retirement account. When money is first contributed to your account, it’s generally considered non-vested, meaning you don’t have the right to it if you leave your job before a certain date. Over time, your contributions become vested, usually based … Read more

401k loans can impact mortgage applications because they reduce your available retirement savings and may affect your debt-to-income ratio (DTI). Lenders consider DTI when evaluating your ability to repay a mortgage. A higher DTI can make it more difficult to qualify for a mortgage or result in a higher interest rate. However, the specific impact … Read more