You’ve been saving money for your entire career so you can enjoy your golden years. Not sure what happens to your 401(k) when you retire? Financial expert Joe Anderson and Alan Clopine break down the options as well as the pros and cons of the various options. The duo also explains how to avoid penalties that could take a significant amount of money out of your retirement savings. They also discuss what happens to your 401(k) once you pass away and what the options are for your loved ones.

Important Points:

(1:00) – 401(k) Participants and Plans

(3:20) – The Basics of 401(k)

(4:10) – 401(k) Matches

(5:46) – Roth Option

(7:38) – True or False? There are penalties if I roll my 401(k) to a Roth IRA before I’m age 59 1/2.

(10:45) – Countdown to Retirement

(11:59) – What happens to your 401(k) upon retirement?

(12:25) – Pros & Cons of Leaving your 401(k) with your Employer upon Retirement

(14:00) – Pros & Cons of Rolling your 401(k) to an IRA upon Retirement

(17:30) – 401(k) Penalties

(19:24) – True or False? At age 70½ I can no longer contribute to my Company’s 401(k).

(20:20) – Transferring your 401(k) or IRA to your loved ones upon your passing

Broadcast Date: June 11, 2017

Pure Financial Advisors, LLC is a fee-only Registered Investment Advisor providing comprehensive retirement planning services and tax-optimized investment management to thousands of people across the nation.

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IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, Inc. A Registered Investment Advisor.
• Pure Financial Advisors Inc. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors. #YourMoneyYourWealth #YMYW #YourMoneyYourWealthTV…(read more)

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401(k): What Happens When You Retire? – Your Money, Your Wealth® TV S4 | E12

Retirement is a significant milestone in one’s life. It is the moment when years of hard work and saving pay off, allowing individuals to finally enjoy their golden years. One crucial aspect of retirement planning is having a solid investment vehicle in place to support oneself financially after leaving the workforce. One such popular option in the United States is the 401(k) retirement plan.

In the 12th episode of Season 4 of Your Money, Your Wealth® TV, the hosts delve into the topic of what happens when you retire with a 401(k) plan. They provide valuable insights and tips to help viewers understand the role of a 401(k) in retirement and how to make the most out of it.

A 401(k) plan is an employer-sponsored retirement savings account that allows individuals to contribute a portion of their pre-tax income towards their retirement. The primary advantage of this plan is the potential for tax-deferred growth. This means that the contributions made to the plan, as well as any generated earnings, are not taxed until withdrawal. As a result, individuals may benefit from a lower tax liability during their working years while saving for retirement.

However, it is essential to understand the rules and restrictions that come with 401(k) plans. One significant limitation is the early withdrawal penalty. If individuals decide to withdraw money from their 401(k) before the age of 59 ½, they will incur a 10% early withdrawal penalty on top of paying income taxes on the amount withdrawn. This penalty aims to discourage individuals from prematurely depleting their retirement savings.

Once retirees reach the age of 72, they must begin taking Required Minimum Distributions (RMDs) from their 401(k) plans. This ensures that individuals start withdrawing their funds and paying taxes on them, as the government wants to collect the deferred taxes eventually. It is crucial to plan these distributions carefully to avoid any unnecessary tax burdens.

On the show, the hosts discuss various strategies to optimize one’s retirement income with a 401(k). They highlight the importance of ensuring that the 401(k) investments align with the retiree’s risk tolerance and time horizon. Depending on individual circumstances, a more conservative or aggressive investment approach may be appropriate.

Additionally, the experts emphasize the benefits of creating a diversified retirement income stream. Relying solely on a 401(k) plan might not be enough to cover all the financial needs during retirement. Supplementing this income with other sources like Social Security benefits, individual taxable brokerage accounts, or even part-time work can provide a more secure financial foundation.

Retirement is not a one-size-fits-all concept. Each individual’s retirement journey is unique, and there are no universal answers. However, understanding and maximizing the potential of a 401(k) plan is a valuable step towards achieving financial security in retirement.

In conclusion, the 12th episode of Your Money, Your Wealth® TV’s fourth season provides viewers with essential insights into what happens when you retire with a 401(k) plan. By understanding the rules, limitations, and potential strategies, retirees can make informed decisions that will help them enjoy a comfortable and fulfilling retirement. Remember, it is crucial to seek professional advice and develop a personalized retirement plan that suits your particular situation.