401(k), IRA, Roth, HSA, tax brackets, deductions and Social Security basics.
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- What is a 401(k)?
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An employer-sponsored retirement savings plan where employees contribute pre-tax income and the employer may match contributions.- Can anyone participate in a 401(k)?
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No, only employees of companies that offer the plan can participate.- What is the 2024 contribution limit for a 401(k)?
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23,500 dollars for employees under 50, plus 7,500 catch-up if 50 or older.- What is employer matching in a 401(k)?
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The employer contributes money to your account when you contribute, typically up to a percentage of your salary.- What does vesting mean in a 401(k)?
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The schedule by which you gain full ownership of employer contributions to your account.- Can you borrow money from your 401(k)?
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Yes, many plans allow loans, typically repaid within 5 years with interest.- What is a Roth 401(k)?
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An employer plan where contributions are made with after-tax dollars, and qualified withdrawals are tax-free.- What is the annual contribution limit for a traditional IRA?
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7,000 dollars per year for those under 50, plus 1,000 catch-up if 50 or older (2024).- Who can deduct their entire traditional IRA contribution?
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Those with no employer retirement plan, or those with income below certain thresholds if covered by a plan.- What are Required Minimum Distributions (RMDs)?
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The minimum amount you must withdraw from a traditional IRA each year starting at age 73.- What is a major penalty for early withdrawal from a traditional IRA?
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10% penalty on earnings plus income tax owed, unless you qualify for an exception.- What is the main advantage of a Roth IRA?
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Contributions grow tax-free and qualified withdrawals in retirement are tax-free.- Can you withdraw your Roth IRA contributions anytime without penalty?
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Yes, you can withdraw contributions (not earnings) penalty-free at any time.- What is the 2024 Roth IRA income phase-out range for single filers?
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Phase-out begins at 146,000 dollars and completes at 161,000 dollars of modified adjusted gross income.- What is a backdoor Roth conversion?
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Contributing to a traditional IRA and immediately converting it to a Roth when your income exceeds direct Roth contribution limits.
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