The employer-sponsored 401k plan comes in two different account types: Traditional and Roth. The main difference between them is when and how they get taxed. Traditional 401k contributions give you tax benefits when you contribute money into your plan. Roth 401k contributions give you tax benefits when you withdraw money from your plan. Here’s everything […]
401K OVERVIEW & FAQ What is a 401k? A 401k is an employer-sponsored retirement savings plan. Employees can contribute a part of their paycheck each month, and companies may choose to match contributions up to a certain limit (ex. A dollar-for-dollar employer match up to 5% of an employee’s salary each year). Contributions to your […]
If you’re a W-2 employee, your employer may choose to offer a SEP IRA as an alternative to a full employer-sponsored 401k plan. As an employee, you cannot make direct contributions to a SEP IRA, like you could with a 401k. A SEP IRA is like a simpler, more cost-effective alternative to offering a 401k plan. Smaller companies […]
OVERVIEW A SEP IRA has a few unique contribution rules if you have employees in your business. Only an employer can contribute to a SEP IRA; employees cannot contribute to their own accounts. When you make employer contributions, you’re obligated to make equal percentage contributions to every eligible employee’s accounts. What is the equal percentage […]
Contributions to a SEP IRA are made with income that hasn’t been taxed yet. You get a tax deduction each year you contribute and investments in your account grow tax-deferred until retirement. A SEP IRA has similar withdrawal rules as a traditional IRA. Once you contribute to your account, you cannot withdraw from it until you reach the […]
OVERVIEW A SEP IRA (Simplified Employee Pension) is a tax-deferred retirement account for business owners and self-employed individuals. Contribution rules are different for a SEP IRA than other IRAs like the traditional and Roth IRAs. SEP IRA contribution limit Employers can contribute up to 25% of their compensation up to $61,000 for 2022 and $66,000 […]
With a traditional IRA, your contributions are deducted from your taxable income, and investments in your account get tax-deferred until retirement. The IRS doesn’t let you take money out of a traditional IRA without penalties until you reach the age of 59½. You’re also required to take minimum distributions from your account once you reach the […]
The contribution limits for a traditional IRA and Roth IRA are $6,000 for 2022 and $6,500 for 2023. If you’re over the age of 50, you also get an additional $1,000 in catch-up contributions, bringing your total limits to $7,000 for 2022 and $7,500 for 2023. What is the contribution limit for an IRA? The […]
A Roth IRA is an individual retirement account that allows anyone with earned income to make contributions with after-tax dollars. Investments within your account grow tax-free until you make withdrawals in retirement. Because you already paid taxes when you contributed, taking distributions from a Roth IRA are completely tax-free. Unfortunately, a Roth IRA has income limits. If […]