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It’s About A Retirement Strategy

A 401(k) plan is a self-directed, qualified retirement plan established by an employer to provide future retirement benefits for employees. Employee contributions are made on a pre-tax basis, and employer contributions are often tax deductible. If you have a Roth 401(k) option, contributions are made with after-tax dollars, but qualified distributions after age 59½ are free of federal income tax. To qualify for a tax-free distribution, the distribution must also satisfy the five-year holding rule.

If you elect to participate in a 401(k) plan, you can allocate a percentage of your salary to your plan every paycheck. The maximum annual contribution is $17,500 in 2013. If you will be 50 or older before the end of the tax year, you can contribute an additional $5,500. Contribution limits are indexed annually for inflation. The monies in your account will accumulate tax deferred until withdrawn, when they are taxed as ordinary income.
Reminders about your 401K planThe money in a 401(k) plan is portable. When you leave your job or retire, you can move your money or take a taxable distribution. However, if you leave a company before you are fully vested, you will be allowed to take only the monies that you contributed yourself plus any vested money, as well as any earnings that have accumulated on those contributions. Within certain limits, the money in your 401(k) plan can be rolled over directly to your new employer’s retirement plan without penalty. Alternatively, you can roll your money directly to an individual retirement account (IRA).

Generally, you must begin taking required minimum distributions from 401(k) plans no later than April 1 of the year after you reach age 70½. Distributions from regular 401(k) plans are taxed as ordinary income and may be subject to a 10% federal income tax penalty if withdrawn before age 59½, except in special circumstances such as disability or death.

A 401(k) plan can be a great way to save for retirement, especially if your employer offers matching contributions. If you are eligible to participate in a 401(k) plan, you should take advantage of the opportunity, even if you have to start by contributing a small percentage of your salary. This type of plan can form the basis for a sound retirement strategy to increase your nest egg.
Call The Host of Radio Show- CBS Sports Radio 1580AM, Freeman Owen Jr I specialize in retirement planning strategies. Let me help you determine the best way to plan for retirement and keep your money safe so you can enjoy the retirement lifestyle you always dreamed about. My consultation is free so call (866) 471 7233.