1. U.S. Bureau of Labor Statistics, August 22, 2019.
Be mindful if your existing plan contains employer stock or if you have existing loans as there may be consequences to rolling the balance to an IRA or another qualified plan, including a 401(k), in these instances.
This information is a general discussion of the relevant federal tax laws provided to promote ideas that may benefit a taxpayer. It is not intended for, nor can it be used by, any taxpayer for the purpose of avoiding federal tax penalties. Taxpayers should seek the advice of their own financial professionals regarding any issues specific to their situation.
Diversification does not guarantee against loss. It is a method used to manage risk
Qualified Roth(k) distributions must meet a five-year holding period and satisfy one of three additional requirements: reaching age 59 1/2 , disability or death. Five years is measured from January 1 of the year of your first Roth(k) contribution. Plan provision may impact withdrawal availability.
Assumes you reduce your Roth(k) contribution (by an assumed 25% tax rate) to keep your take-home pay equal to pre-tax contributions. This hypothetical total vested account balance includes salary deferrals, investment gain and an employer contribution of $10,000.
Distributions are only available upon a qualifying hardship, attainment of age 59 ½ or upon death, disability, severance of employment or termination of the plan. Roth(k) distribution is considered qualified when participant is at least 59 ½ years old and satisfies the 5 year holding period rules. This example assumes participant is at least 59 ½.
Investors' anticipated tax bracket in retirement will determine whether or not a Roth account versus a traditional retirement account will provide more money in retirement. Generally investors who are in a higher tax bracket at retirement relative to their current tax bracket while making contributions to a Roth account benefit more than an investor who is in a lower tax bracket at retirement.
For a Roth IRA, earnings withdrawn prior to reaching age 59½ and/or not meeting the five-year holding period may be subject to a 10 percent penalty in addition to income tax. After-tax contribution amounts are generally returned income tax free; however, for Roth conversions, if converted amounts are not held for the five-year period, distributions may be subject to a 10 percent penalty
Principal invested is not guaranteed at any time, including at or after the fund's specific target retirement date.
This is a general communication for informational and educational purposes. The materials and the information are designed or intended to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. If you are seeking investment advice or recommendations, please contact your financial professional. You should consult your tax professional regarding your own tax situation.
Securian Financial’s qualified retirement plan products are offered through a group variable annuity contract issued by Minnesota Life Insurance Company.