If you’re considering using your 401(k) to pay for college, there are a few things you should know. First, you can withdraw money from your 401(k) penalty-free if you use it to pay for qualified education expenses, such as tuition, fees, books, and room and board. However, you will still have to pay income taxes … Read more
Generally, traditional contributions to a 401(k) are limited to when you are an active employee. However, there are limited exceptions to the rule. If you are an employee of a governmental or tax-exempt organization, you may be allowed to contribute to your 401(k) even after you retire. You should consult with your employer or plan … Read more
Investing in both a Roth IRA and a 401(k) can be a smart financial move. A Roth IRA allows you to contribute after-tax dollars, which means your contributions are not tax-deductible now but will grow tax-free and can be withdrawn tax-free in retirement. A 401(k) allows you to contribute pre-tax dollars, which reduces your current … Read more
Individuals can establish and contribute to a 401(k) plan even without an employer-sponsored program. This option, known as a self-directed 401(k), allows them to set up a retirement account individually. The process involves choosing a financial institution that offers self-directed 401(k)s, creating an account, and making contributions directly from their income or savings. Self-directed 401(k)s … Read more
Investing your 401(k) can be a great way to build retirement savings. It’s a tax-advantaged account, meaning that you don’t pay taxes on the money you contribute or the earnings until you withdraw it in retirement. There are different types of investments you can choose from within your 401(k), such as stocks, bonds, and mutual … Read more
An IRA and a 401(k) can serve as complementary retirement savings options, allowing individuals to maximize their tax benefits and long-term savings potential. While both accounts offer tax-deferred growth, they differ in terms of employer contributions, contribution limits, and withdrawal rules. Combining an IRA with a 401(k) can provide a balanced approach to retirement planning, … Read more
Negotiating a 401(k) match can be a valuable strategy for increasing your retirement savings. Many employers offer matching contributions, where they contribute a certain amount to your 401(k) plan for every dollar you contribute. The maximum 401(k) match allowed in 2023 is $6,500, so negotiating a higher match can significantly boost your retirement savings. Before … Read more
Rolling over a 401k to a 529 plan allows you to transfer retirement savings into a tax-advantaged education savings account. By doing so, you can potentially lower your tax burden and potentially increase your child’s educational funds. Earnings in a 529 plan grow tax-free and withdrawals used for qualified education expenses are not subject to … Read more
Traditional individual retirement accounts (IRAs) and 401(k) plans are retirement savings accounts that offer tax advantages. IRAs are available to individuals and can be opened at banks, brokerages, or other financial institutions. Contributions to traditional IRAs are tax-deductible, meaning they reduce your taxable income for the year. Earnings in the account grow tax-deferred, meaning you … Read more
If you have a 401k from a previous employer, you might be wondering if you can move the money into an IRA. The answer is yes, you can roll over a 401k to an IRA. This is a common way to keep your retirement savings on track, even if you’re no longer working for the … Read more