Month: September 2018

Which Common Mistakes To Avoid With Your 401k Plan

Your financial future depends upon making solid decisions when it comes to your savings and your retirement strategies. However, most folks tend to make some common errors in this regard.

These mistakes are easily overlooked but can cost you a great deal in terms of loss of investment growth and or a loss of time.

One of the obvious areas mistakes are made have to do with how you use your 401k retirement plan. Your IRA/401K can be a very powerful vehicle to supercharging your retirement savings but only if used correctly. So let’s take a look at some mistakes to avoid while taking advantage of your 401k plan.

Traditional Versus Rollover Individual Retirement Accounts

Planning for retirement is no easy task.  As an employee in the United States taking advantage of Individual Retirement Account or IRA is a smart addition to your retirement strategy.

However, how do you know which IRA is right for you? Should you be taking advantage of a Traditional IRA or a Roth IRA? Let’s look at some of the main differences between the Traditional and Roth IRA below.

Tax Benefits

The traditional IRA allows for tax-deferred growth. Withdrawals are usually penalty free but are limited to certain items including college expenses, purchase of our first home (this does have a lifetime cap of $10,000) some major medical expenses and can even include some unemployment expenses that are long term.

The Roth IRA, on the other hand, offers tax-free growth. However, withdrawals are only tax-free providing that you are over the age of 59 ½ and your Roth IRA has met the 5-year aging requirement. So long as these 2 requirements have been met then withdrawals from the Roth IRA are free from federal taxes.