Is it ever OK to raid your 401(k) before you reach retirement age? It's almost never a good idea to withdraw money from a 401(k) plan early. The costs of dipping into that fund before it matures can set the stage for later retirement -- or no retirement at all. For that reason, most 401(k) accounts have a series of penalties in place to make it extremely difficult to take out money early: Employers want you to leave the balance untouched as long as possible, allowing it to grow so that you can benefit from it in retirement. But despite built-in disincentives, more than one-third of 401(k) participants dipped into their retirement early, according to a major study, often to cover surprise expenses. Here are some factors to weigh if you find yourself in that situation. Taxes and penalties Any money withdrawn from a 401(k) plan is taxed at your regular income rate. Withdrawing before the IRS-mandated age of "59½" usually means that money is subject to an … [Read more...] about Is it ever OK to raid your 401(k)?
Using 401k to pay off student loans
Last Updated Feb 18, 2011 6:12 PM EST "Should I pay off my credit card debt or use the money to save for retirement?" I hear this question frequently from people in their 20s and 30s, and it's a good follow-up question to my earlier post, Retirement Planning Advice for My 20-Something Son. Some people even have a budget for their savings: "I can save $5,000 this year, so how should I prioritize my savings goals?" My first thought is, if you think you can save $5,000 per year, figure out how to save $6,000! I contend that most people can save more than they think they can by taking a hard look at their spending habits. Most people don't have enough money to meet all their savings needs, so you'll meet your goals faster if you can figure out how to save more. guidelines for prioritizing your savings depending on the choices you might face.First, save enough to build up an emergency fund that equals your living expenses for three to six months. This is just in case you get laid off from … [Read more...] about Should You Save for Retirement or Pay Off Credit Card Debt?
Q: I work in HR, and recently I’ve been reading about an emerging trend in company benefits—student loan payment matching. I understand that millennials and Gen Z are entering the workforce saddled with debt, so it could be a huge way to attract young talent. Should I expect this—and other alternative benefits—to become mainstream? Are health insurance and 401k matching no longer enough? A: No, health insurance and 401k matching are not enough anymore. Millennials are in a significantly different situation than previous generations entering the workforce. The costs of living, housing, and higher education are astronomical and the amount of student debt this generation is graduating with is much higher than any generation before them. Employers who are eager to hire talented younger workers need to pay more competitive bases and recognize what other types of monetary support these new employees can benefit from. Many recent surveys have revealed that young people … [Read more...] about Elaine Varelas Weighs in on Student Loan Reimbursement Benefits
Sarah Jacobs, provided by Published 11:59 am, Monday, February 5, 2018 TurboTax is one of the most popular online services for filing your tax return. I decided to file my own taxes this year for the first time ever, and it was easier than I thought it would be. TurboTax displays a tax refund estimate in the top left corner that kept me motivated when the process got a bit tedious. For years I was fortunate enough to rely on my parents who so kindly offered, and in 2014 through 2016, I paid a trusty client service representative at H&R Block. Last year, my parents offered the favor again and like any sensible person, I didn't refuse. LATEST BUSINESS VIDEOS Now Playing: Now Playing FOX Business Beat: Super Bowl spending; paychecks increase Fox5DC Tiny Robot Drinks Alcohol in South Korea Jukin Media Got Road Rage? Ford Performance Buzz Car Displays Your Mood to Other Drivers Ruptly TV Yes, You Have to Pay Taxes On Your … [Read more...] about I filed my own taxes for the first time ever using TurboTax — and got the biggest refund I’ve ever received
Debt comes in many forms, and the average U.S. household that carries debt owes around $131,431 in total, according to NerdWallet's 2017 household debt study. The bulk of that comes in the form of mortgages, but Americans also carry an average of $15,654 in credit card debt, $46,597 in student loans, and $27,669 in car loans. If you're working hard at saving for retirement (which you should be!), it can be tough to balance saving for your retirement goals and paying down debt. Some people choose to take out a 401(k) loan to relieve themselves of debt, thinking that once the debt is paid off, they'll be able to boost their retirement contributions, avoid paying interest on outstanding debt, and ultimately save more in the long run. Image source: Getty Images. Are you ready to drain your 401(k) and knock out that mortgage now? Not so fast. Borrowing from your 401(k) is a big decision, and there are several factors you need to consider. 1. Perform a financial checkup Before … [Read more...] about Should You Take Out a 401(k) Loan to Pay Off Debt?