Planning For Income Needs with an IRA or 401K
The type of savings fund that can get you the most flexibility over time should be used when saving for retirement. This retirement fund is called a 401K. The 401K account is funded via wages that are taken directly from your employer into a retirement account. 401K contributions come from your pretax salary and cannot be taxed themselves. The name 401K came from the IRS code that created these types of accounts.
One of the best advantages to having a 401K fund is that you can make a lot of money in the long term as well as save money on taxes. Your contributions will be subtracted from your salary and then your tax is calculated. So you still receive the full salary but are only taxed on a portion of it.
Most employers will match their employee's contributions though there are 401k rules to follow. These retirement accounts are protected by pension laws, as they are a form of personal investment.
A few of the disadvantages are that you cannot access the money in your 401K until you are 59 1/2. If your employer does contribute to your 401K then only your contributions will be going towards your investment, like is the case with IRA accounts. Also a 401K is not insured by the Pension benefit guaranty corporation. Like is often the case with a fixed annuity.
It is possible to investment in a variety of ways in your 401K. Your money can go towards money market funds, maturities, bonds, stock funds and other avenues. You are allowed to chose how you want to invest and can make changes when additional funds are deposited into the retirement fund. Most financial experts say that most individuals are not aggressive enough with their investments as stocks that are held for a long time do very well. Towards the end of the 401K period, when you may want to take money out you can switch to more conservative funds.
There are 401k rules and maximum contributions limits that can be made to your 401K. Each year will have a maximum allowable 401k contribution limit. Most contributions are made before tax, as you will receive the most benefit from this type of contribution. Pre tax payments must be made fairly quickly. It is also possible to make after tax contributions.
After-tax contributions have a different set of 401k or IRA rules and these funds can be easier to withdraw then pre-tax money. There are also additional rules for highly compensated employees and low-income employees. These laws were put into place so the top executives would not design a 401K that was only advantageous to them. The 401K from companies must be a good plan for the majority of the employees in the company. So highly compensated individuals actually have different rates.
With 401k and IRA accounts you take title as an individual. Make sure when buying property in the from of joint ownership to consider the other types of title. Tenants in common, as an example allows multiple owners (more than two). Community property and joint tenancy are some other options. Study your options before proceeding in these circumstances.
The 401K differs slightly from the IRA account, but they share many similarities. You can take an IRA deduction, just like a 401k. Roth IRA rules differ in that you can't take an IRA deduction, but you get to withdrawal the funds tax free in retirement. It is possible to take a 401k loan for yourself, but there are some drawbacks. These 401k loans can be used to purchase a house, medical expenses or paying for education. - 23210
One of the best advantages to having a 401K fund is that you can make a lot of money in the long term as well as save money on taxes. Your contributions will be subtracted from your salary and then your tax is calculated. So you still receive the full salary but are only taxed on a portion of it.
Most employers will match their employee's contributions though there are 401k rules to follow. These retirement accounts are protected by pension laws, as they are a form of personal investment.
A few of the disadvantages are that you cannot access the money in your 401K until you are 59 1/2. If your employer does contribute to your 401K then only your contributions will be going towards your investment, like is the case with IRA accounts. Also a 401K is not insured by the Pension benefit guaranty corporation. Like is often the case with a fixed annuity.
It is possible to investment in a variety of ways in your 401K. Your money can go towards money market funds, maturities, bonds, stock funds and other avenues. You are allowed to chose how you want to invest and can make changes when additional funds are deposited into the retirement fund. Most financial experts say that most individuals are not aggressive enough with their investments as stocks that are held for a long time do very well. Towards the end of the 401K period, when you may want to take money out you can switch to more conservative funds.
There are 401k rules and maximum contributions limits that can be made to your 401K. Each year will have a maximum allowable 401k contribution limit. Most contributions are made before tax, as you will receive the most benefit from this type of contribution. Pre tax payments must be made fairly quickly. It is also possible to make after tax contributions.
After-tax contributions have a different set of 401k or IRA rules and these funds can be easier to withdraw then pre-tax money. There are also additional rules for highly compensated employees and low-income employees. These laws were put into place so the top executives would not design a 401K that was only advantageous to them. The 401K from companies must be a good plan for the majority of the employees in the company. So highly compensated individuals actually have different rates.
With 401k and IRA accounts you take title as an individual. Make sure when buying property in the from of joint ownership to consider the other types of title. Tenants in common, as an example allows multiple owners (more than two). Community property and joint tenancy are some other options. Study your options before proceeding in these circumstances.
The 401K differs slightly from the IRA account, but they share many similarities. You can take an IRA deduction, just like a 401k. Roth IRA rules differ in that you can't take an IRA deduction, but you get to withdrawal the funds tax free in retirement. It is possible to take a 401k loan for yourself, but there are some drawbacks. These 401k loans can be used to purchase a house, medical expenses or paying for education. - 23210
About the Author:
When dealing with Roth IRA rules there are a number of issues you'll need to consider. One important topic that should be reviewed is 401k distribution as they apply to your specific needs.
posted by X - Men @ 4:05 AM
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