Fete Lifestyle Magazine November 2021 - Food Issue | Page 27

4)Choose a Roth option

If you’re considering transferring your old 401(k) to a new 401(k) or an IRA, you may be able to choose a Roth instead of traditional tax-deferred options. When saving in a traditional 401(k) or IRA, contributions are made with pre-tax money, providing an immediate tax break. Savings grow tax-deferred, and withdrawals are taxed as regular income. Contributions to Roth accounts, on the other hand, are made with after-tax money. Savings grow tax-free and withdrawals are not subject to income tax. If you feel you will be in a higher tax bracket when you retire, you may save money in the long run by using a Roth and paying taxes on those assets now. You generally can withdraw contributions to Roth accounts at any time, tax- and penalty-free. And once you turn 59 ½, you can withdraw contributions and earnings without any penalties as long as the account has been open at least five years.

5)Take distributions or cash out

You can begin taking distributions from your 401(k) penalty-free when you turn 59½. That said, the longer you can hold off taking distributions, the more your savings can benefit from these plans’ tax-advantaged growth potential. No matter your age, if you need money immediately, you have the option of cashing out your old 401(k). However, this option is usually not recommended, since you’ll face a 10% fee on early 401(k) withdrawals on top of the federal, state, and local income taxes you'll owe on the money you withdraw.

As a Lifestyle and Investment/Wealth advisor we can discuss each option and help you make an informed decision that meets your needs and keeps you on track toward your long-term financial goals. Most importantly, this will help empower you to protect what matters most, your long-term wealth!

For more information contact directly at 312-243-3907/Office * 312-952-8040/Cell; [email protected], www.1stcig.com * 1stcig.com/Media/Images/1stCapitalOld401K.pdf