401k contributions are deducted from an employee’s pretax income, reducing their taxable income and the amount of taxes owed. However, these contributions do not count as earned income for the purposes of calculating Social Security benefits or other government programs that use earned income as a factor. Earned income is generally defined as wages, salaries, … Read more
A 401k expense ratio is a measure of the annual costs associated with managing a 401k plan. It’s expressed as a percentage of the total plan assets, and it covers expenses such as administration fees, recordkeeping costs, and investment management fees. A good 401k expense ratio is typically lower than 1%. This means that for … Read more
With a 401(k) loan, you can borrow money from your retirement savings account to use for emergencies or other financial needs. However, it’s important to be aware of the risks and drawbacks. The loan must be repaid within a certain timeframe, usually five years, and if you leave your job, you may have to pay … Read more
Generally, you can withdraw money from a traditional 401(k) without penalty once you reach age 59½. However, if you withdraw before reaching this age, you may owe income taxes and a 10% penalty on the amount you withdraw. There are exceptions to this rule, such as if you experience a hardship, become disabled, or use … Read more
Fidelity typically updates 401k account balances throughout the day, reflecting the latest market activity and contributions. The frequency of updates may vary depending on factors such as market volume and account activity. However, account balances may not be immediately updated after a contribution or market change. To ensure the most up-to-date information, it’s recommended to … Read more
Rolling over a 401(k) to a Roth IRA can be a smart financial move for those looking to potentially boost their retirement savings. However, it’s important to understand the differences between the two accounts and the potential tax implications involved. A 401(k) is an employer-sponsored retirement plan that offers tax-deferred growth, meaning you don’t pay … Read more
The annual contribution limit for a 401(k) plan is the maximum amount of money that you can save into your account each year. This limit is set by the IRS and is subject to change each year. For 2023, the annual contribution limit for a 401(k) plan is $22,500. This limit is up from $20,500 … Read more
Withdrawing funds from your 401(k) before you reach the age of 59½ can result in substantial penalties. However, there are a few exceptions to this rule. You may be able to withdraw funds if you: experience a financial hardship, meet certain medical expenses, pay for higher education, or cover the costs of a first-time home … Read more
Borrowing from a 401k might seem like a convenient option in challenging financial times, but it should be approached with caution. The money in a 401k is meant for retirement, and taking a loan can significantly impact future financial security. Interest charges and fees associated with the loan can add to the overall cost. Additionally, … Read more
If you’ve left your job and are wondering about your 401(k) options, you have several choices. Generally, you can keep the account with your former employer’s plan, roll it over into an Individual Retirement Account (IRA), or take a withdrawal. However, if you take a withdrawal before age 59½, you’ll usually have to pay income … Read more