#401k

#401k

By the time Dr. Jill Green finished medical school, she'd racked up seven figures in student debt and had virtually zero assets. "My net worth was negative $1 million," the family practice and emergency medicine doctor told Business Insider. "Our primary home was our only asset." Green, who began her career in investment banking before pivoting to medicine, began entertaining the idea of property investing after hearing a physician couple speak at a virtual entrepreneur event for doctors.

Homebuying > retiring? Currently, 401(k) participants must pay an additional 10% tax on funds withdrawn from their account before the age of 59-and-a-half-also known as an early distribution-for any number of reasons, including buying a home. Rules are different under Individual Retirement Accounts (IRAs), which allow qualified first-time homebuyers to withdraw up to $10,000 without incurring the 10% penalty.

Saving for retirement in a traditional IRA or 401(k) can make more sense than socking money away in a Roth account. That's because traditional retirement accounts give you a tax break on your contributions. If you're a higher earner in a higher tax bracket, that tax break may be very valuable to you. Plus, you might earn too much money to contribute to a Roth IRA directly, making a traditional IRA a better bet.

This workplace account allows you to make pre-tax contributions to a retirement plan and, in many cases, your contributions also entitle you to receive matching funds from your employer. However, while most people know they should contribute to a 401(k), they aren't necessarily certain about what to do next. If you have a maxed-out account at work and you're trying to figure out what else to do with your money, here are some options to consider.

A 401-K plan is a company-sponsored retirement account. Employees contribute their designated percentage of their income to be allocated. Employers often may offer to match at least a portion of these contributions. Contributions are made with pre-tax funds. There are two types of 401-K account categories: traditional and Roth-which differ primarily in how they're taxed. Assuming one is over age 59 ½, traditional 401-K withdrawals are taxed as income at the participant's income bracket at the time of withdrawal,

Higher-income workers who earn more than $145,000 must now put their catch-up contributions into a Roth 401(k), meaning that they'll pay taxes now rather than later in retirement. The rules generally apply to contributions beginning in 2027, but some plans can implement them earlier. The $145,000 income threshold is based on prior-year wages and applies separately at each employer. New hires and self-employed workers without W-2 wages are exempt.

The Redditor discovered that $800,000 of their retirement funds were being shifted into an annuity, which they do not want, prompting concerns about accessing their wealth.

Even as tariff-driven volatility sends markets violently in both directions, staying invested is the best course of action for young investors building a sound nest egg.