According a recent Washington Post article, Fidelity Investments had 200,000 participants in the 401(k) programs it managed who had over $1 million saved up at the end of this year’s third quarter. That’s a 4,000 participant increase from the just the previous quarter. These numbers are quite inspirational as they show that it’s far from impossible to save a million dollars for retirement, which seems to be the magic number for the dream retirement these days. However, those retirement accounts didn’t reach seven figures overnight. No, it took years of diligent saving and smart investing. You too can strive to reach Continue reading So, You Want to be a 401(k) Millionaire?
There’s a good chance that you’re familiar with what a Health Savings Account (HSA) is. You may not have one, but you may have considered opening one at some point in recent years as it has become a common offering by many employers. If you are unfamiliar with HSAs, they are tax-free accounts that can be used to pay for qualified medical expenses and are used in conjunction with high deductible health plans. Distributions used to pay to medical expenses are tax free and there are no income limits for contributions. Furthermore, HSAs can be a great long-term investment as Continue reading Going Up? 2020 HSA Limit Increases Announced
If you work in the public sector or for the government, you’ve probably heard of a type of retirement plan called a Deferred Retirement Option Plan (DROP). A DROP plan allows for an employee to work past their retirement-eligibility date while the employer adds annual, lump-sum payments into an interest-bearing account during that period. Once the employee actually retires, they gain access to the account and all the money in it. It benefits the employer as the employer avoids dealing with an increased pension amount that normally would come with added years of service. It should be noted that DROP Continue reading Public Sector Employee? Look for the DROP!
It’s not talked about nearly as much as Roth IRAs or regular 401(k), but you can have a Roth 401(k). No, not every employer retirement plan offers it. Yes, it does have many of the same advantages as a Roth IRA. If you know what makes a Roth IRA so enticing then you can probably guess the how a Roth 401(k) works. If you guessed that it’s because your contributions are taxed when they go into your account and not when they are distributed, then you are correct. This can be very advantageous, especially if you have an understanding of Continue reading Roth IRA? What About a Roth 401(k)?
If you have a lot of money saved up in an IRA, you may find yourself thinking about tapping into it before you need it. Maybe you had an emergency that requires some extra funds or your want to splurge a bit as you get near retirement. Whatever you decide to do with your money, just make sure it’s not prohibited by the rules governing IRAs. Prohibited transactions include those in which account owners act in a self-serving manner or in which the account owner uses the money to enrich himself/herself or other “disqualified person.” A disqualified person includes the Continue reading Don’t Be Tempted Into a Prohibited Transaction
You may not realize it, but there the money in your Roth IRA will be distributed in a particular order. The order is important as it will determine any potential tax consequences you may have when you take a distribution from your account. In a Roth IRA, there are generally four (4) classifications of assets within an account: (1) regular contributions, (2) taxable conversion and rollover amounts, (3) non-taxable conversion and rollover amounts, and (4) earnings on Roth IRA assets. Remember, that your contributions are tax-free, but that doesn’t mean that other money in the account is not taxable. Thus, Continue reading Following Orders: Your Roth IRA and Your Money