Category: 401k

If your work-based retirement plan allows loans, you typically can borrow up to the lesser of 50% of your vested balance or $50,000. Most loans must be repaid within five years, but if the money is used to purchase a primary residence, the repayment period may be longer. The...

Just how wealthy are you? You'll want to figure that out before you make any major life decisions. Your first impulse may be to go out and buy things, but that may not be in your best interest. Even if you're used to handling your own finances, now's the...

Merging Your Money When You Marry Getting married is exciting, but it brings many challenges. One such challenge that you and your spouse will have to face is how to merge your finances. Planning carefully and communicating are important because the financial decisions that you make now can have...

Distributions from Traditional IRAs: Between Ages 59 1/2 and 70 1/2 What is an IRA distribution? A withdrawal from an IRA is referred to as a distribution. Distributions can come in the form of several payment patterns, from a one-time (lump-sum) payment to a series of distributions over several...

What are my options if I inherit an IRA or an employer retirement savings plan account? If you don’t want the money, you can always disclaim (refuse to accept) the inherited IRA or plan funds. But if you’re like most people, you will want the money. Your first thought...

If you want to limit potential losses while participating in the potentially attractive returns of a market-driven investment but would also like a guaranteed return, an indexed annuity might be worth checking out. The performance of indexed annuities, also referred to as equity-indexed or fixed-indexed annuities, is tied to...

Answer: Yes, but the taxable portion of your distribution may be subject to a 10 percent penalty for early withdrawal if you’re not yet age 59½. If you are 59½ or older and take money from your traditional IRA, you will not be assessed a penalty, though you may...

If you take a distribution from your IRA intending to make a 60-day rollover, but for some reason the funds don’t get to the new IRA trustee in time, the tax impact can be significant. In general, the rollover is invalid, the distribution becomes a taxable event, and you’re...

You’ve probably heard that if you withdraw taxable amounts from your 401(k) or 403(b) plan before age 59½, you may be socked with a 10% early distribution penalty tax on top of the federal income taxes you’ll be required to pay. But did you know that the Internal Revenue...

Answer: Yes. Unless you absolutely cannot afford to set aside any dollars whatsoever, you should contribute to your employer’s 401(k) plan. A 401(k) plan is one of the most powerful tools you can use to save for your retirement. The first benefit is that your pre-tax contributions to a...

When you change jobs, you need to decide what to do with the money in your 401(k) plan. Should you leave it where it is, or take it with you? Should you roll the money over into an IRA or into your new employer’s retirement plan? As you consider...

Qualified employer-sponsored retirement plans can provide a number of tax and nontax benefits to employees. The employee perspective on these plans should certainly consider the obvious tax deferral and retirement savings benefits. Additionally, however, employees should consider various strategies to optimize their benefits. For example, employees will approach their...

Required distributions and non-spousal death benefits can’t be rolled over. Required distributions, certain periodic payments, hardship distributions, corrective distributions, and certain other payments can’t be rolled over. Spouse beneficiaries generally have the same rollover rights as the plan participant, and in addition may roll over Roth 401(k) and 403(b)...

Required distributions and nonspousal death benefits can’t be rolled over. You can make only one tax-free, 60-day, rollover from one IRA to another IRA in any one-year period no matter how many IRAs (traditional, Roth, SEP, and SIMPLE) you own. This does not apply to direct (trustee-to-trustee) transfers, or...

Introduction A withdrawal of money from an employer-sponsored retirement plan is generally referred to as a distribution. When you have money in a plan maintained by your current or former employer, you need to be aware of your distribution options for several reasons. First, not every option may be...

  Distributions from Traditional IRAs: Between Ages 59½ and 70½ A withdrawal from an IRA is referred to as a distribution. Distributions can come in the form of several payment patterns, from a one-time (lump-sum) payment to a series of distributions over a number of years. Depending on how...

Answer: The more you save for retirement, the better your chances are of retiring comfortably. One way to help accomplish this is by taking advantage of an employer match. Many employers offer matching contributions as part of their employer-sponsored retirement plan benefit package. With an employer match, your employer...

Father Time doesn’t always have a good reputation, particularly when it comes to birthdays. But when it comes to saving for retirement, time might be one of your strongest allies. Why? When time teams up with the growth potential of compounding, the results can be powerful. The premise behind...

Deciding when to retire may not be one decision but a series of decisions and calculations. For example, you’ll need to estimate not only your anticipated expenses, but also what sources of retirement income you’ll have and how long you’ll need your retirement savings to last. You’ll need to...

Throughout your career, retirement planning will likely be one of the most important components of your overall financial plan. Whether you have just graduated and taken your first job, are starting a family, are enjoying your peak earning years, or are preparing to retire, your employer-sponsored retirement plan can...

What to Do after You’ve Been Automatically Enrolled in Your Company’s Retirement Plan At one time, the only way you could join your company’s 401(k) plan, 403(b) plan, or 457(b) plan was to put pen to paper and sign yourself up by filling out the appropriate forms. Now, though,...

If you direct your own 401(k) plan investments, you’ll need to consider the investment objectives, the risk and return characteristics, and the performance over time of each investment option offered by your plan in order to make sound investment decisions. Fees and expenses are factors that may affect your...

In general, your retirement plan benefits pass to the beneficiaries you designate on the plan beneficiary designation form. It is generally recommended that you designate beneficiaries, the percentage of the total that each will receive, and any backup beneficiaries on the plan beneficiary form. However, if you are married...

Answer: There’s no way to know the answer to that without reviewing your individual circumstances and financial goals. However, if you are investing too conservatively, it can have a profound effect on your long-term financial security. That’s particularly true for women. According to a U.S. Department of Labor study...

Selecting beneficiaries for retirement benefits is different from choosing beneficiaries for other assets such as life insurance. With retirement benefits, you need to know the impact of income tax and estate tax laws in order to select the right beneficiaries. Although taxes shouldn’t be the sole determining factor in...

Answer: Risk tolerance is an investment term that refers to your ability to endure market volatility. All investments come with some level of risk, and if you’re planning to invest your money, it’s important to be aware of how much volatility you can endure. Your tolerance for risk affects...

Answer: A qualified plan is an employer-sponsored retirement plan that qualifies for special tax treatment under Section 401(a) of the Internal Revenue Code. There are many different types of qualified plans, but they all fall into two categories. A defined benefit plan (e.g., a traditional pension plan) is generally...

Income tax Like other distributions from traditional IRAs and retirement plans, RMDs are generally subject to federal (and possibly state) income tax for the year in which you receive the distribution. However, a portion of the funds distributed to you may not be subject to tax if you have...

Should You Delay Your First RMD? Remember, you have the option of delaying your first distribution until April 1 following the calendar year in which you reach age 70½ (or April 1 following the calendar year in which you retire, in some cases). You might delay taking your first...

How Are RMDs Calculated? RMDs are calculated by dividing your traditional IRA or retirement plan account balance by a life expectancy factor specified in IRS tables. Your account balance is usually calculated as of December 31 of the year preceding the calendar year for which the distribution is required...

What Are Required Minimum Distributions (RMDs)? Required minimum distributions, often referred to as RMDs or minimum required distributions, are amounts that the federal government requires you to withdraw annually from traditional IRAs and employer-sponsored retirement plans after you reach age 70½ (or, in some cases, after you retire). You...

In general, a rollover is the movement of funds from one retirement savings vehicle to another. You may want, or need, to make a rollover for any number of reasons–your employment situation has changed, you want to switch investments, or you’ve received death benefits from your spouse’s retirement plan....

If you’ve lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It’s important to understand your options. What will I be entitled to? If you leave your job (voluntarily or involuntarily), you’ll be entitled to a distribution of your...

Can I roll a retirement plan distribution into an IRA? Answer: If you’re asking this question, you probably have a 401(k) or other retirement plan through a former employer. The short answer is yes–most retirement plans allow you to roll your plan funds over into an IRA after you’ve...