401k Withdrawal to Ensure You Have Enough Retirement Money

401k Withdrawal - How To Ensure You Have More Than Enough Cash For Retirement
By Josh Neumann

A 401k withdrawal is obviously essential once you reach retirement. However, in order to live the retirement lifestyle of your dreams, you need to make sure you have enough money in your 401k in the first place, so when you go to withdraw the money, you have enough after tax dollars to support you.

The 401K plan is a way in which the worker puts a portion of their income into a retirement pan, and often times the employer will match that up to a certain point. This is often a very effective retirement planning mechanism, because it allows the employee’s funds to grow free of tax until they conduct a 401k withdrawal.

These 401K tax deductions may also be converted over to stocks, mutual funds, and bonds. Some firms will also allow the tax deduction to be used to purchase the firm’s shares that you work for. Believe it or not, you can also set up a 401k if you own your own business, although many aren’t aware of that. There are two varieties of a 401k plan-a trustee version and a participant plan.

With the trustee 401K plan, someone is appointed to look after where the 401k investment money is put into. With the participant plan, on the contrary, the employee themselves has the option to decide where they want their money to be placed.

Again, some companies will put their own money into your fund to encourage you to save more for retirement, although not every company will do this. Most 401ks will allow up to 15% of your income to be directed into your 401k.

Although it may be difficult, especially when you see the money growing and thinking of what you could purchase with it, don’t take the money out until you hit retirement. Not only will you incur an early withdrawal penalty (usually 10%), you will also be charged income tax on the funds you withdraw.

However, if you delay until you reach 59 ½, you incur no such penalties, so wait to take the money out! Hopefully, these 401 withdrawal tips have helped you with your 401k plan understand. Remember, most people never have enough money to live the retirement lifestyle they’ve always wanted because of a simple lack of planning. They are then forced to either not do the things they wanted during retirement, or worse yet, continue working well into retirement just to have enough money to survive on.

Don’t be one of them. Follow these 401k withdraw tips, and you will have more than enough to live the retirement lifestyle you’ve always wanted.

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