- Do 401(k) Loans Show Up on Your Credit Report?
A 401(k) loan does not appear on your credit report because it isn’t considered a loan from a third-party lender. When you borrow from your 401(k), you’re borrowing your own money. As such, it isn’t subject to credit checks or reporting requirements. That said, missing payments or defaulting on the loan can lead to tax… read more…
- State Tax on 401(k) Withdrawals: General Rules and Strategies
While federal taxes apply uniformly, the way states tax 401(k) withdrawals can vary widely. Some states fully tax 401(k) distributions, while others provide deductions or exclude retirement income altogether. These differences can influence how much of your savings you keep and may even factor into decisions about when and where to retire. A financial advisor… read more…
- How to Retire Early With a 401(k): Rules and Strategies
Retiring early with a 401(k) requires understanding how to access funds before the standard retirement age without triggering heavy penalties. This involves leveraging strategies like Rule 72(t) withdrawals, the Rule of 55 exception or a rollover for more flexibility. Each method has specific conditions, timelines and tax implications that shape whether early retirement is financially… read more…
- Are Part-Time Employees Eligible for 401(k)s?
For years, many part-time workers were excluded from 401(k) participation, leaving them with fewer ways to save through an employer. As flexible schedules and gig work have become more common, this gap has affected a growing share of the workforce. Recent federal law changes now expand access to employer-sponsored retirement plans, allowing more part-time employees… read more…
- Can You Change Your 401(k) Contribution at Any Time?
Your 401(k) plays a key role in helping you save for retirement, but life events can affect how much you’re able to contribute. A raise, job change, or unexpected expense might lead you to consider adjusting your contributions. Many employer-sponsored plans allow changes throughout the year, though specific rules and timing vary by plan provider.… read more…
- Should You Take a 401(k) Loan for Home Improvement?
Using a 401(k) loan for home improvement may feel like an easy solution to unexpected expenses. After all, you’re borrowing from yourself. There’s no credit check, and the interest you pay goes back into your retirement account. While the convenience may be appealing, the long-term financial trade-offs deserve your consideration. A 401(k) loan can impact… read more…
- Can I Cash Out My 401(k) While Still Employed?
While some retirement plans allow in-service withdrawals, most discourage early access with penalties, taxes and missed growth potential. Before making a move that could undermine your long-term retirement goals, it helps to know the rules. A financial advisor can help you balance today’s needs with your long-term retirement goals. Can You Cash Out a 401(k)… read more…
- What Happens If You Default on a 401(k) Loan?
If you default on a 401(k) loan, the balance is usually treated as a taxable distribution. This may result in income taxes and, if you are under 59½, a 10% early withdrawal penalty. It can also reduce the amount you have available for retirement in the future. A financial advisor can review your situation and… read more…
- How to Repay a 401(k) Loan After Leaving a Job
Unlike traditional loans, a 401(k) loan is tied to your employer-sponsored retirement plan. That means your repayment options and timeline may change significantly once you are no longer with the company. If you fail to repay the loan within the specified period, it could be treated as a taxable distribution, potentially subjecting you to income… read more…
- How Long Does It Take to Get a 401(k) Loan?
How long it takes to get a 401(k) loan can vary depending on your employer, plan administrator and whether your plan offers an online portal or requires paperwork. In some cases, the process may take just a few days. In others, you may need to wait a couple of weeks before the funds hit your… read more…
- How to Withdraw Money From Your 401(k) Before Retirement
Tapping into your retirement savings early may seem like a risky idea, but there are many reasons why you may have to take money from your 401(k) before retirement. These accounts are meant to support you in your later years, yet unexpected financial challenges can force your hand at using your funds sooner. Before doing… read more…
- Should You Roll Over Your 401(k) to an IRA or a Roth?
When you leave a job or retire, you need to decide what to do with your 401(k). If it’s a traditional 401(k), you can move it to a traditional IRA, where taxes are paid when you withdraw, or to a Roth IRA, where you pay taxes now but withdrawals in retirement are tax-free. If it’s… read more…
- ESOP vs 401(k): Key Differences and How Each Plan Works
An Employee Stock Ownership Plan (ESOP) gives employees an ownership stake in the company. It does this at no direct cost by allocating shares of company stock to their retirement accounts. In contrast, a 401(k) allows employees to save and invest a portion of their paycheck. These plans often offer employer matching for extra savings,… read more…
- How Much Should I Have in My 401(k) at 25?
Figuring out how much you should have in your 401(k) at 25 depends on your income, savings rate and when you started contributing. A common benchmark from financial planners is to aim for one year’s worth of salary saved by age 30, which could translate to about 50% of your annual income by 25. Factors… read more…
- Cash Balance Plan vs. 401(k): Key Differences for Retirement
Cash balance plans and 401(k)s are both employer-sponsored retirement options, but they work differently. A cash balance plan is a type of pension that promises a set payout at retirement based on a formula, while a 401(k) depends on how much you contribute and how your investments perform. The choice between both affects your savings… read more…
- Roth 401(k) vs. After-Tax 401(k) Contributions
Contributions to Roth 401(k) accounts and after-tax contributions to regular 401(k) accounts both involve after-tax dollars, but they follow different tax and distribution rules. Roth 401(k) contributions grow tax-free and allow tax-free withdrawals of both contributions and earnings in retirement if conditions are met. After-tax 401(k) contributions, by contrast, may be withdrawn tax-free but earnings… read more…
- Does Contributing to a 401(k) Reduce Taxable Income?
If you have a retirement account, you are probably wondering, does a 401(k) reduce taxable income? The short answer is yes, contributing to a traditional 401(k) plan does indeed reduce your taxable income for the year of contribution. When you make contributions with pre-tax dollars, the money goes into your retirement account before calculating income… read more…
- How Much Should I Have in My 401(k) at Age 60?
By age 60, retirement is no longer a distant goal, it is just around the corner. For many, it begs the question: how much should I have in my 401(k) at age 60? Many financial experts recommend having saved eight times your annual salary by this point to help support a comfortable retirement. At this… read more…
- How Much Should I Have in My 401(k) at Age 40?
By age 40, many people begin to evaluate whether their retirement savings are on track. While there’s no single benchmark that fits everyone, national data offers a reference point. Factors like income, years in the workforce and access to retirement plans all influence how much someone may have saved by this stage. However, according to… read more…
- How Much Should I Have in My 401(k) at Age 35?
You may be well into your career by age 35 but still years away from retirement, making it a common checkpoint for assessing your 401(k) progress. According to Fidelity, the average 401(k) balance for people in their mid-to-late thirties was $73,200 at the end of 20241. But averages don’t tell the whole story: how much… read more…
- 401(k) Asset Allocation By Age: Examples and Charts
As you progress through your career, your income investment strategy should evolve to balance growth opportunities with risk management. In your 20s and 30s, you might embrace more aggressive allocations. This means a higher percentage of stocks to capitalize on long-term growth potential. By your 40s and 50s, there’s a gradual shift toward more conservative… read more…
- What’s Considered an “Aggressive” 401(k) Strategy?
An aggressive 401(k) strategy typically involves allocating a larger share of retirement contributions to stocks, particularly those with higher growth potential. This approach aims to maximize long-term returns by accepting greater short-term volatility. It’s often favored by younger investors who have more time to recover from market downturns. Asset choices might include small-cap funds, emerging… read more…
- Can You Roll Over a 401(k) Into a 403(b) Account?
The IRS does permit rollovers between these 401(k) and 403(b) plans, allowing you to consolidate retirement savings when appropriate. However, not all 403(b) plans accept rollovers from 401(k) accounts. This decision is up to the individual plan administrator. While both 401(k) and 403(b) accounts are tax-advantaged retirement plans, they serve different employer types. 401(k)s are typically… read more…
- What Happens to Money in a 401(k) That Isn’t Vested?
When you participate in a 401(k) plan, both your contributions and your employer’s contributions can help you build retirement savings. However, not all the money in your account may fully belong to you right away. Employer contributions typically follow a vesting schedule, meaning you earn the right to keep those funds over time. If you… read more…
- Can I Cash Out My 401(k) at Age 62? Pros and Cons
While you can cash out a 401k at age 62, it’s not a decision to take lightly. At this age, withdrawals are exempt from the 10% early withdrawal penalty, though they’re still subject to ordinary income taxes. Taking a lump sum can provide immediate access to cash for living expenses, debt repayment or other needs,… read more…