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401(k)

Thursday’s need-to-know money news

June 17, 2021 By Liz Weston

Today’s top story: Should you save less for retirement? Also in the news: Can student loan forgiveness happen, a new congressional proposal would require IRA/401(k) withdrawals to start at 75, and how to spot fake reviews on Amazon.

Should You Save Less For Retirement?
An extremely early retirement goal may rob you of the joy of living now. Consider a revised path and second career.

Can Student Loan Forgiveness Still Happen?
Debt forgiveness of $10,000 would cancel debt entirely for about 15 million borrowers, according to a NerdWallet analysis of federal data.

Required IRA, 401(k) withdrawals would start at age 75 under congressional proposal. Here’s who would benefit
How your retirement savings might be affected.

How to Spot Fake Reviews on Amazon
Those five stars might be bought and paid for.

Filed Under: Liz's Blog Tagged With: 401(k), fake Amazon reviews, IRA, retirement savings, student loan forgiveness

Q&A: A 401(k) versus an IRA: Which one wins this smackdown?

April 26, 2021 By Liz Weston

Dear Liz: I am a 27-year-old with a big investment question. The company I work for matches 401(k) contributions up to 9%, which is all well and fine since I contribute enough to receive the company match. I have just about $60,000 in my 401(k) and I have a Roth IRA on the side as well as a brokerage account for stocks. I would like to roll over my 401(k) into another IRA since the investment choices in the 401(k) are rather limited. I’m a big fan of investment diversification with different funds. Is this a good option to choose or is this a silly idea with no merit? I understand the tax implications involved but am willing to bite the bullet for more investment options.

Answer: Good for you for being so diligent about saving for retirement. Your early start should give you a lot of options when you’re older.

For now, your question has an easy answer. Typically, you can’t roll a 401(k) account into an IRA while you’re still working for the employer that provides the 401(k).

There are a few exceptions. Once you turn 59½, some plans do allow such rollovers. Also, a few plans offer “mega backdoor Roths” that allow you to contribute after-tax money to a 401(k) and then do an “in service” conversion to a Roth IRA. This option helps high-income people get around the income limitation that would otherwise prevent them from contributing to a Roth IRA.

You will have the option of rolling your money into an IRA once you leave your job, but don’t assume such a rollover is always the right choice.

Most 401(k)s offer enough options to give you plenty of diversification, plus you may have access to low-cost institutional funds that wouldn’t be available in an IRA. You’re also protected by federal law that requires the companies offering 401(k)s to act as fiduciaries — in other words, they must put your best interests first. You often have the option of rolling your 401(k) balance into a new employer’s plan, which means you would be able to take loans from the plan. That’s not an option with an IRA.

There are no tax implications for rolling over a 401(k), by the way. Only if you convert the money to a Roth IRA will you owe taxes. A conversion may make sense, but you’ll want to talk to a tax pro first.

Filed Under: Q&A, Retirement Tagged With: 401(k), IRA, q&a, retirement savings

Friday’s need-to-know money news

November 13, 2020 By Liz Weston

Today’s top story: When life blows up your well-laid plans. Also in the news: How to shop Black Friday deals online, 5 things to consider when shopping for index funds, and how much you should have in your 401(k), based on your age.

When Life Blows Up Your Well-Laid Plans
A sudden change in your financial security can trigger a wealth of reactions, including grief and disorientation.

How to Shop Black Friday Deals Online
Smart Black Friday shopping begins with planning.

5 Things to Consider When Shopping for Index Funds
Index funds are a set-it-and-forget-it investment perfect for beginners, but it helps to know what to look for.

How Much You Should Have in Your 401(k), Based on Your Age?
The right amount at every stage.

Filed Under: Liz's Blog Tagged With: 401(k), Black Friday, index funds, Investing, life interruptions, Savings, unexpected events

Thursday’s need-to-know money news

October 1, 2020 By Liz Weston

Today’s top story: Sustainable investing could get a lot harder. Also in the news: Why you should file the FAFSA ASAP, why savings accounts and CDs are still worth it despite low rates, and how to find your lost 401(k).

Sustainable Investing Could Get a Lot Harder
The Labor Department wants to keep socially responsible investments out of 401(k)s and private pensions.

The FAFSA Just Opened: Why You Should Apply Now
File the FAFSA early to get a better shot at more free money and more time to appeal if you need to.

Savings Accounts and CDs Are Still Worth It Despite Low Rates
Rates will rise again.

How to Find Your Lost 401(k)
Don’t leave hard-earned money behind.

Filed Under: Liz's Blog Tagged With: 401(k), banking, CDs, FAFSA, financial aid, interest rates, savings accounts, sustainable investing

Monday’s need-to-know money news

July 20, 2020 By Liz Weston

Today’s top story: 6 credit card scams and how to avoid them. Also in the news: A new episode of the SmartMoney podcast on COVID impulse spending and building credit while paying off debt, how Black Friday shopping could look very different this year, and making a plan to repay your borrowed 401(k) money.

6 Credit Card Scams and How to Avoid Them
Crooks don’t have to steal your card — just your card information. Keep your money and your identity safe.

Smart Money Podcast: COVID Impulse Spending, and Building Credit While Paying Debt
Finding the right payoff method for your debt.

Black Friday Shopping Could Look Very Different This Year
Lining up for doorbusters could be a thing of the past.

Make a Plan to Repay Your Borrowed 401(k) Money
Start thinking of a payoff strategy.

Filed Under: Liz's Blog Tagged With: 401(k), Black Friday, building credit, COVID impulse spending, credit card scams, payback plan, Paying Off Debt, SmartMoney podcast

Wednesday’s need-to-know money news

July 15, 2020 By Liz Weston

Today’s top story: Which airline has the most valuable elite status program. Also in the news: A look at summer homebuying, 25 tips for buying your first home, and how to automatically transfer your 401(k) money when you change jobs.

Which Airline Has the Most Valuable Elite Status Program?
The best perks and how to earn them.

Summer Homebuying: Tips for Pricey Homes and Pandemic Concerns
Know your market.

25 Tips for Buying Your First Home
How to avoid a money pit.

How to Automatically Transfer Your 401(k) Money When You Change Jobs
Introducing auto portability.

Filed Under: Liz's Blog Tagged With: 401(k), airline rewards, auto portability, elite status, first time homebuyers, summer homebuying, tips

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