#401k

#401k

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.