EPISODE · Feb 26, 2021 · 5 MIN
#36: The Finance Flash Go Podcast | Important Topics About Money | The All-Important 401(k) Account!
from Finance Flash Go | Create and Grow Wealth | Lessons, Tips, and Strategy · host Taylor Brana
Today on the Finance Flash Go! podcast, we are talking about the all-important 401(k) account! A 401(k) investment account is probably the most common retirement investment account offered by employers. Additionally, self-employed individuals can open a solo 401(k). In a 401(k), the money you put in ($19,500 limit in 2020) is not yet taxed (pre-tax money). It then grows in the account and is taxed when you withdraw the money in the future. This is advantageous because your effective tax rate during your peak earning years is very likely to higher than it will be in retirement when you will take the money out. Often, employers will contribute to your 401(k) as well. Commonly, a “match” is offered in which the employer will contribute a certain amount if you contribute to the 401k to a certain level. The maximum combined employer-employee contribution in 2020 is $57,000. If you are self-employed with a solo 401(k), don’t worry. You can contribute as both employer and employee. The price for this tax advantage is that the money cannot be withdrawn prior to age 59½. Take the money out before that age and you will pay a 10% penalty in addition to the typical taxes. Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice. A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions. We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!
What this episode covers
Today on the Finance Flash Go! podcast, we are talking about the all-important 401(k) account! A 401(k) investment account is probably the most common retirement investment account offered by employers. Additionally, self-employed individuals can open a solo 401(k). In a 401(k), the money you put in ($19,500 limit in 2020) is not yet taxed (pre-tax money). It then grows in the account and is taxed when you withdraw the money in the future. This is advantageous because your effective tax rate during your peak earning years is very likely to higher than it will be in retirement when you will take the money out. Often, employers will contribute to your 401(k) as well. Commonly, a “match” is offered in which the employer will contribute a certain amount if you contribute to the 401k to a certain level. The maximum combined employer-employee contribution in 2020 is $57,000. If you are self-employed with a solo 401(k), don’t worry. You can contribute as both employer and employee. The price for this tax advantage is that the money cannot be withdrawn prior to age 59½. Take the money out before that age and you will pay a 10% penalty in addition to the typical taxes. Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice. A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions. We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!
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#36: The Finance Flash Go Podcast | Important Topics About Money | The All-Important 401(k) Account!
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