When you contribute to your 401(k) account, the money is taken out of your paycheck before taxes are calculated. This means that you don’t pay federal income tax on the money you contribute. However, you will pay Social Security and Medicare taxes (FICA taxes) on the money you contribute. This is because FICA taxes are … Read more
When a company closes, the 401(k) plans of its employees can be affected. The options available will depend on factors such as the type of 401(k) plan, the age of the participants, and whether or not the plan has been terminated. In some cases, participants may be able to roll over their 401(k) assets to … Read more
When you leave your job, you have several options for your 401(k) account. You can keep it with your former employer, roll it over to an Individual Retirement Account (IRA), or cash it out. If you choose to cash out, you’ll pay income tax on the amount you withdraw, plus a 10% penalty if you … Read more
401(k) and 403(b) plans are both retirement savings plans offered by employers. They allow employees to save for retirement on a tax-advantaged basis. However, there are some key differences between the two plans. 401(k) plans are offered by for-profit businesses, while 403(b) plans are offered by public schools and certain other tax-exempt organizations. 401(k) plans … Read more
If you’re thinking about transferring your 401k to a Roth IRA, there are a few things you need to know. First, you’ll need to determine if you’re eligible to make a Roth IRA contribution. To be eligible, you must meet certain income requirements. If you don’t meet the income requirements, you may still be able … Read more
The maximum contribution limit for a 401(k) plan varies based on factors such as the participant’s age and whether the employer offers a matching contribution. Generally, individuals can contribute up to a certain percentage of their pre-tax salary each year. The maximum percentage may change periodically, so it’s advisable to check with your employer or … Read more
When you withdraw money from your 401k, you may wonder if you have to pay state taxes. The answer depends on a few factors, including where you live and when you contributed to the account. Generally, if you live in a state with no income tax, you will not have to pay state taxes on … Read more
A 401k, or 401(k) plan, is a retirement savings plan that allows employees to save and invest a portion of their paychecks before taxes are taken out. On the other hand, an IRA, or Individual Retirement Account, is a retirement savings account that is set up and owned by an individual. Both 401k and IRAs … Read more
Withdrawing money from a 401(k) can be done in several ways, depending on your age and financial situation. If you are under 59½, you can withdraw funds for specific reasons, such as a first-time home purchase, medical expenses, or higher education expenses. There may be penalties and taxes associated with early withdrawals. If you are … Read more
401k plans offer significant advantages compared to IRAs. One key benefit is higher contribution limits. In 2023, the contribution limit for 401k plans is $22,500 ($30,000 for individuals age 50 and older), while the limit for IRAs is $6,500 ($7,500 for those 50 and older). Additionally, 401k plans may offer employer matching contributions, which can … Read more