#401k

#401k

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.