. Traditional vs. Roth 401k Contributions When contributing to a 401k, there are two main options to choose from: traditional or Roth. The primary difference between the two lies in the timing of taxation. Traditional 401k: Contributions are made pre-tax, reducing your current taxable income. This means you pay less in taxes now, but withdrawals … Read more
A 401k is a retirement savings plan offered by employers in the United States. It allows employees to save money from their paycheck on a pre-tax basis. This means that the money is taken out of their paycheck before taxes are calculated, so they pay less in taxes overall. The money in a 401k grows … Read more
When it comes to filing your taxes, understanding how your retirement contributions affect your tax liability is crucial. One common question is whether or not you need to claim your 401(k) contributions on your tax return. The answer is generally no. 401(k) contributions are made on a pre-tax basis, meaning they are deducted from your … Read more
Deciding the percentage of your income to allocate to your 401(k) depends on various factors. Age, income, and financial goals are crucial considerations. If you’re young and early in your career, contributing a higher percentage, such as 15-20%, is advisable. As you near retirement, you may want to increase contributions to maximize your savings. If … Read more
Choosing investments for your 401(k) can be overwhelming, but it’s crucial to make informed decisions to maximize your retirement savings. Start by assessing your risk tolerance and time horizon. Consider target-date funds that automatically adjust asset allocation based on your expected retirement age. Explore index funds that track market indexes like the S&P 500, offering … Read more
Withdrawing funds from your Fidelity 401(k) is straightforward. To start the process, log into your Fidelity account online. Next, navigate to the “Investments” tab and select your 401(k) plan. Choose the “withdrawals” option, and specify the amount and type of withdrawal you want to make. You can either request a direct deposit into your bank … Read more
If you’re no longer contributing to your former employer’s 401(k) plan, rolling it over to an IRA might be a smart move. With an IRA, you have more investment options and potentially lower fees, offering you greater control over your retirement savings. However, there are also potential tax implications to consider. If you’re uncertain about … Read more
When you take out a 401k loan, the payments you make are typically deducted from your paycheck before taxes are taken out. This means that your taxable income is reduced by the amount of your loan payments, which can save you money on taxes. However, you will have to pay taxes on the money you … Read more
Roth 401k plans, while offering tax-free withdrawals in retirement, come with several potential drawbacks. One major concern is the lack of immediate tax savings. Unlike traditional 401k plans, Roth 401k contributions are made with post-tax dollars, meaning there is no reduction in current taxable income. This can make it less appealing for individuals who need … Read more
Determining the ideal portion of paycheck to allocate to a 401(k) depends on several factors, including age, financial goals, and risk tolerance. Generally, it’s recommended to contribute enough to receive any employer match, as it’s essentially free money. Aiming to contribute at least 10-15% of gross income is a good starting point, but can be … Read more