A good rate of return on 401k investments is one that outpaces inflation and meets your financial goals. The specific rate that is considered “good” will vary depending on factors such as your age, risk tolerance, and investment horizon. However, a general rule of thumb is to aim for a return of 7% or more … Read more
Transferring funds from an IRA to a 401(k) is not a direct option. However, there are indirect methods to achieve this. One way is to first roll over the IRA funds to a traditional IRA, then use that as a basis to transfer to a 401(k) if the employer’s plan allows it. It’s important to … Read more
If you’re struggling to repay student loans, you may be tempted to tap into your 401(k) retirement savings. However, this can have serious consequences for your long-term financial goals. Withdrawing money from your 401(k) before you turn 59½ will trigger a 10% penalty, plus you’ll have to pay income taxes on the amount you withdraw. … Read more
Understanding the tax implications of withdrawing funds from a 401(k) is crucial. Generally, withdrawals before age 59½ without meeting certain exceptions incur a 10% early withdrawal penalty. Additionally, these withdrawals are taxed as ordinary income, potentially increasing your tax liability. There are scenarios where you can avoid the penalty, such as having a qualified disability, … Read more
If you’ve left your job, you may still be able to contribute to your 401(k) plan. However, your options will depend on the plan’s rules and the length of time since you left. Generally, you can continue to contribute to your 401(k) plan for up to 60 days after you leave your job. After that, … Read more
Withdrawing funds from your 401(k) to repay student loans is possible, but it comes with potential drawbacks. While it can provide immediate relief from student loan debt, it can also have long-term financial implications. Withdrawing funds before retirement age typically incurs income taxes and a 10% penalty. Additionally, it reduces your retirement savings, which can … Read more
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When it comes to taxes, it’s important to be aware of whether or not you need to include your 401k contributions. The short answer is: it depends. If you contribute to a traditional 401k, your contributions are made pre-tax, which means they are deducted from your income before taxes are calculated. This reduces your taxable … Read more
In a 401k retirement savings plan, compound interest plays a crucial role in growing your investments over time. Compound interest means that interest is earned not only on the initial contributions but also on the accumulated interest from previous periods. As a result, your savings grow at an accelerated rate. For example, if you contribute … Read more
You may withdraw money from a 401k account early (before reaching the age of 59.5) if you meet certain criteria. These exceptions are known as hardship withdrawals. Withdrawing early usually means you’ll have to pay income tax on the withdrawn amount, and there is also a 10% early withdrawal penalty unless you are over 55 … Read more