3 Things You NEED To Know About Your 401k!
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- เผยแพร่เมื่อ 3 ต.ค. 2024
- In this video we discuss three things you need to know about your 401k.
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This Video Contains:
401k, roth 401k, 401k plan, employer benefits, employee benefits, understanding benefits, employee benefits explained, financial advisor, personal finance, personal finance tips, personal finance for beginners, 401k plan, simple ira, sep ira.
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This content is for education and entertainment purposes only. Past performance is not indicative of future results.
I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do I keep contributing to my 401k or look at alternative sectors to meet my goals?
keep contributing to your 401K, remember you are in for the long haul, but I'd suggest you consider financial advisory
Agreed, good financial advise is invaluable, my portfolio is well-matched for every season of the market and has just yielded 85% from early last year to date. I and my advisor are working on a 7 figure ballpark goal, tho this could take another year.
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She goes by ''Karen Lynne Chess'' a renowned figure in her industry with over two decades of experience. It's best you research her further on the web, can't divulge much.
The value of my interest keeps going higher but I am having issues with the tax effect and I can't really understand why or if I am doing or following the right steps
I can't really say though that the tex effect is slowing you down or having a direct effect on your progression as the case maybe it is just my opinion.
You have to understand the plan well and have the basic foundations and principles that guide what you are engaging in
Yeah knowing the basics,the steps and how to apply them accordingly is absolutely the best, but also in a situation one can't t really understand it I think is best to contact a professional
This has been a big case over time,and has really brought about a bridge with clients, employers and employees relationships. I think in cases like these if they are properly attended to and in the right direction (professionally) one can easily get over with it
So to me the best option could be seeking professional guidance.
Traditional 401(k) contribution reduces amount tax paid but are NOT tax deductible as there is no line on 1040 to ask for tax deduction.
I contribute 10% into a ROTH, my company matches 50% up 6% plus do company contribution of 4% so just a tad confused on how much in going in and how it’s calculated. Salary $68K
Sounds like a 3% match as long as you contribute 5% of your gross. The additional 4% is unusual. You may want to verify that.
3% = 2040
4% = 2720
Sounds like the company is investing $4760 into your 401k for you.
Right now I'm saving 6% on my pre-tax and 9% on Roth. My employer matches 100% up to the first 5%. In addition to the employer 401k and Roth, I have a separate brokerage account through Fidelity where I contribute monthly into my IRA. What are your thoughts on those pre-tax and Roth savings rates and Fidelity monthly contributions?
A lot of it depends on cash-flow, but it sounds like you're putting quite a bit of money away and getting the full match, so nicely done! I'm a fan of tax diversification, meaning you have money in (Tax-Deferred ~IRA, Tax-Advantaged ~Roth, and Taxable Accounts ~Brokerage.) Looks like you're spreading it out in different tax buckets, so that will likely allow you to be more flexible. Happy to chat as well if you'd like! Thanks for the comment!
@@KyleKuyat thanks a million! 👍
Hey Kyle, I'm moving out of the US to a different country later this year. What will happen to my 401k that I hold with my current employer? What would you recommend I do with it?
Great question, it depends on the country and the custodian you have. Some custodians allow you to maintain your account there, but it often depends on the country.I would encourage you to call the plan sponsor at your current 401K to see if you can keep the money there or if you need to move it to another custodian. Hope that helps, if you need more guidance happy to chat.
My company currently matches 100% of the employee's contribution up to a maximum of %1 of the employee's salary and matches 50% of the employee's contribution up to a maximum of 5%.
Vesting on the matched amount is 2 years.
Maximum annual 401k contributions paid is $2,800.00
Can you explain to me this like I was 5 y/o? lol
how much a month I should contribute to get the maximum amount?
Hey DJ, thanks for the questions.
The match is based on your salary so it's hard to say what amount that is from a dollar standpoint without knowing that piece of it.
However, it sounds like it would be broken down like this based on how you are describing it.
100% - First 1% (1%)
50% - Next 4% (2%)
Total - 3% Match IF you contribute 5% or more of your income into the plan.
To be sure, one would have to look at the plan document.
The maximum you can contribute as an employee for 2024 is $23,000, with an additional catch up $7,500 if you're 50 or older.
Assuming you're under 50, it'd be about $1916/month (23,000/12) in order for you to "max out" your 401K.
Hope that helps shed some light on your questions.
Target does a match, would it be wise to enroll even though I’ll be leaving soon?(temp job) Was thinking I could roll it over to my next one…. Thought?
Hey Matt - I have a new video I recently uploaded that goes over your options for an old 401K. That should give you some guidance on your situation. If you want to talk about it I'm also happy to chat. Thanks for the comment!
Ive always questioned the 401k fund that jobs have you get into...but i just see it as gambling with nicer wrapping on it. My family tells me to do it do it do it. But i just cant get passed the fact that it could all be gone in an instant and then whats the point? I just shelled out x% for x amount of years and i didnt have control over any of it really...
Is my logic flawed?
Typically in 401K plans you're not buying single stock your funds which are a (collection of stocks, you own a piece of each) If you invest in a single stock and it tanks, then yes you've lost all your money, however if you are investing in a fund and one of the stocks in the fund tanks, you still have money in the 50 or so other stocks in the fund. You're not going to get ahead of inflation or have enough in retirement parking money in a checking account savings account of holding onto cash. You need to invest in growth funds. Go see a financial planner or research on your own.
You have control over what you invest it in! That is the most important part. I've maxed out what my company allows every year for my career. I am at peace with how I've done. What alternatives are you thinking about?
Most administrators offer multiple plans to choose from. Target date funds focus on your retirement year, and start out investing aggressively and get more conservative as your retirement year approaches. But your administrator may offer some alternative plans, as well. Mine allows my to invest in a fund that emulates the S&P500. I chose that, so I get roughly the same return as ETFs like VOO or QQQ. You need to look into these funds to see where they are invested, but they generally are well diversified and pretty safe. If the world blows up, you are screwed either way.
Thanks for the prompt reply! Can you do catch up if you’re below 50?
Unfortunately, you cannot if you're under 50. However, you can most likely still contribute to an IRA or a taxable account.
I don't understand. If I put in 4k why would the employer put in 2400 with just a 4 percent match?
With a dollar-for-dollar match, an employer will put in the same amount you do, up to their maximum percentage.
In our example, the employee contributed 5% of their salary or $3,000. The employer will "match" up to 4% of their salary or $2,400. So the total amount going into the plan between both parties is $5,400.
Hope that helps, thanks for the question!
Hi Kyle, if my employer matches up to 4% only should I stay in 4% only as well or I can raise my contribution up to how many %? Is is advisable to go beyond the matching percentage from your employer? Can you explain more please, TIA
Thanks for the question!
The total employee contribution limit for 401(k) plans is is $23,000 in 2024. Also, there is a catch-up that allows for an additional $7,500 to be put in. So if you're 50+, your 401(k) employee contribution limit will be $30,500 in 2024.
Should you raise it above that depends on your situation. Increasing your contributions could increase retirement savings and reduce taxable income for traditional 401(k)'s, which can be a benefit! However, it will also lower cash flow. I'd be happy to help if you'd like to discuss.
How does one get that compounding interest? New to adulthood 😂😅
Simple: just don't touch your account. Any interest you earn, just keep it on your account.
It's a good thing you're "new to adulthood" since the longer you keep money in a 401k, the more compound interest you get. Just keep contributing as much as your employer matches until you're ready to retire and don't touch it until then. The more you put in, the more compond interest you get, although most 401k funds ain't that good so I wouldn't do much more than the employer match.
If you wanna invest more, I'd suggest opening a ROTH IRA or brokerage account and putting it in something that tracks the S&P 500.
Can I open one up myself employer doesn’t have one
Thanks for the question Jess! If your employer doesn't offer a retirement plan you can open and IRA/Roth IRA. You can also open up a taxable account. Hope that helps!
When do you pay taxes on an Employer Roth 401K?
Thanks for the question Nick!
Roth 401K's are funded with "after-tax" contributions. As long as you follow the rules, money in the account will grow tax free and come out tax free. I have a full video I just posted that goes over this in detail if you want more information on it.
@@KyleKuyat thank you I will look at the information. Thank you for the reply
@@nickjones8702 of course! Let me know if you have any more questions.