Hi New this year the contribution limits for your 401k. Are going up. So what should you do, how much should you put in the four oh one K. If anything, I’ve got the answer in my top three financial moves to make right now to set you on track for the rest of the year. Let’s go move number one. Take advantage of these new four oh one K. Limits. You can now funnel $22,500 into your 401k. This year. That’s up from 20,500 employees 50 and older can contribute an extra $7500 which is also up from last year. Big advice here. If you can adjust and maximize your contribution right now, your company probably has some kind of portal. It may be better to spread it out throughout the year than contributing more later. If you can’t adjust your contribution to meet the maximum limit at least make sure you’re meeting the minimum to get the full amount of matching funds from your employer. See how much they’re matching at least get up to that, that’s free money from your lawyer. Move number two. Use your bonus if you’re one of the lucky people who got *** holiday bonus and you’re not sure how to use it. Take that money to pay off debt. Use the snowball method, pay off your smallest debt. First working up to the largest and finally move number three pad your emergency fund. I get this question *** lot. How much should I have in savings? *** good rule of thumb is to have between three and six months worth of expenses saved. So if your monthly expenses are, let’s $3000 *** month, you should have between nine and $18,000 in your emergency slush fund. I know it’s hard, but that is the goal. There are *** lot of different online calculators that can help you figure this out for your family, like this one right here from nerdwallet dot com. You just plug in your rent, your mortgage payment, your utilities, your car payments, all of it. It’ll spit out *** number. I’m gonna put this one and *** couple of others we found on rossen reports dot com. Hope it helps back to you.
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‘Very, very troubling’: More Americans are pulling from their 401(k) to make ends meet
Updated: 8:05 PM EST Feb 2, 2023
Video above: How to take advantage of new 401(k) rulesAs the inflation crisis continues, more Americans are turning to their 401(k)s for help making ends meet.“Some are not only taking it out of their savings, but they are also taking it out of their long-term retirement,” Dominic Calavro, the president and CEO of Florida Tax Watch, said. “Which is shortsighted, but very, very troubling.”Melissa Gannon is the manager of financial planning at Castle Wealth Management in West Palm Beach. She says they often encourage clients to borrow against their 401(k) instead of withdrawing from it when possible. “A lot of plans allow you to borrow from it,” she said. “So, they will let you take out the max of $50,000, so you can take that amount out of it, and you’re borrowing against it.”Gannon explained when someone is younger than 59 and a half, a 10% penalty has to be paid on top of any income taxes when money is withdrawn from a 401(k).“It’s an expensive way to get at your savings, is really the bottom line,” she said. Gannon suggested anyone considering a withdrawal from their 401(k) reach out to the plan’s administrator first.“I just always encourage people to get informed before you start withdrawing,” Gannon said. She also suggests looking into the Secure Act, which allows people to take $1,000 from their 401(k) account without paying the 10% penalty. Gannon said the plan administrator will know if you can borrow against it or if you are eligible for any Coronavirus, disability or hardship-related exemptions.
Video above: How to take advantage of new 401(k) rules
As the inflation crisis continues, more Americans are turning to their 401(k)s for help making ends meet.
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“Some are not only taking it out of their savings, but they are also taking it out of their long-term retirement,” Dominic Calavro, the president and CEO of Florida Tax Watch, said. “Which is shortsighted, but very, very troubling.”
Melissa Gannon is the manager of financial planning at Castle Wealth Management in West Palm Beach. She says they often encourage clients to borrow against their 401(k) instead of withdrawing from it when possible.
“A lot of plans allow you to borrow from it,” she said. “So, they will let you take out the max of $50,000, so you can take that amount out of it, and you’re borrowing against it.”
Gannon explained when someone is younger than 59 and a half, a 10% penalty has to be paid on top of any income taxes when money is withdrawn from a 401(k).
“It’s an expensive way to get at your savings, is really the bottom line,” she said.
Gannon suggested anyone considering a withdrawal from their 401(k) reach out to the plan’s administrator first.
“I just always encourage people to get informed before you start withdrawing,” Gannon said.
She also suggests looking into the Secure Act, which allows people to take $1,000 from their 401(k) account without paying the 10% penalty.
Gannon said the plan administrator will know if you can borrow against it or if you are eligible for any Coronavirus, disability or hardship-related exemptions.