📈401(k)s offer tax benefits and are a great wealth-building tool.
💰Employer matching contributions provide free money for your retirement.
📅Consider your marginal tax rate when deciding between pre-tax and Roth contributions.
⏰Catch-up contributions allow you to save even more for retirement, especially in your 60s.
🔐Auto-enrollment in 401(k)s encourages more employees to save for retirement.
Should I contribute to a pre-tax or Roth 401(k)?
—It depends on your current and future tax rates. Use your marginal tax rate as a guide. If it's below 25%, consider Roth contributions. If it's over 30%, pre-tax contributions may be more beneficial. In between, evaluate your specific situation.
Are catch-up contributions worth it?
—Catch-up contributions allow individuals aged 50 and over to save more for retirement. If you have the means, it can significantly boost your retirement savings. Consider your future living expenses and your retirement goals.
What are RMDs and when do they start?
—RMDs (Required Minimum Distributions) are mandatory withdrawals from retirement accounts that begin at age 72. They help ensure that individuals use their retirement savings as intended. Failure to take out RMDs can result in significant tax penalties.
How does auto-enrollment work?
—Auto-enrollment is a feature that automatically enrolls employees in their employer's 401(k) plan. Employees have the option to opt out if they choose. It helps increase retirement savings rates by making it easier for employees to participate in the plan.
What are the benefits of employer contributions?
—Employer contributions, especially matching contributions, provide additional funds for your retirement savings. They are essentially free money and can significantly increase the growth of your 401(k) account over time.
00:01Learn about the recent changes and benefits of 401(k)s.
03:00Understand the importance of considering your marginal tax rate when choosing between pre-tax and Roth contributions.
05:30Discover the advantages of catch-up contributions, especially in your 60s.
08:00Get insights on RMDs and how they affect your retirement savings.
10:00Learn about the auto-enrollment feature and how it encourages employees to save for retirement.
12:00Find out the importance of employer contributions and how they can boost your retirement savings.
14:00Wrap up with a reminder to review your specific situation and make informed decisions about your 401(k).
