401K: A Good Retirement Plan
With someone retiring soon or thinking about having a more relaxed life, there are many ways to achieve this. One of which is the 401K plan. For a simpler and better description, the 401K is a plan that's being funded with employee contributions. In most cases, what the employee funds is being matched with the same amount by the employer or company as well. What makes this plan popular is that the funds are taken from the salary of the employer and as it accumulates there, one can assure that there is no added tax. So this means, the amount will grow until it can be withdrawn by the employee. But what if you suddenly decide to retire earlier than expected? Will the 401K plan work this way? Should you be expecting any penalties and charges?
If you decide to quit work before the time allotted for withdrawal and number of contributions to be made, then you will be charged with 10% penalty. The main reason why the penalty is even imposed is to make people complete the retirement age before they even start to withdraw from it. But the good news is, the penalties can actually be avoided if you know the ways. Here are facts from IRAvs401kCentral.com you need to know about:
This can be avoided if you happen to quit your job on your 55th birthday or after it. The age when someone can start with the withdrawal is actually 59 1/2 years old. But did you know that the age of 55 will already mean no penalties despite the withdrawal?
What are substantially equal periodic payments? This is very useful for anyone who wants to make an early escape from the retirement plan. But the thing is, the payment has to be substantially equal as well and is based upon the life expectancy of the person. As soon as the payment starts for at least five years or when the person is at the target age which is 59 1/2 years of age. But the downfall is that, the person will be getting the least amount of retirement pay-out that will be given to them. Read http://money.cnn.com/gallery/pf/2013/12/11/best-financial-apps/ for some financial apps to help you.
With these options given, the best method is still to comply with the rules and terms. You not only reap the most benefits but you are guaranteed of less stress and challenges that will be experienced along the way. After all, the aim is to have a comfortable retirement experience and what best way to do this than to have a plan. View website of professional financial advisors here.
If you decide to quit work before the time allotted for withdrawal and number of contributions to be made, then you will be charged with 10% penalty. The main reason why the penalty is even imposed is to make people complete the retirement age before they even start to withdraw from it. But the good news is, the penalties can actually be avoided if you know the ways. Here are facts from IRAvs401kCentral.com you need to know about:
This can be avoided if you happen to quit your job on your 55th birthday or after it. The age when someone can start with the withdrawal is actually 59 1/2 years old. But did you know that the age of 55 will already mean no penalties despite the withdrawal?
What are substantially equal periodic payments? This is very useful for anyone who wants to make an early escape from the retirement plan. But the thing is, the payment has to be substantially equal as well and is based upon the life expectancy of the person. As soon as the payment starts for at least five years or when the person is at the target age which is 59 1/2 years of age. But the downfall is that, the person will be getting the least amount of retirement pay-out that will be given to them. Read http://money.cnn.com/gallery/pf/2013/12/11/best-financial-apps/ for some financial apps to help you.
With these options given, the best method is still to comply with the rules and terms. You not only reap the most benefits but you are guaranteed of less stress and challenges that will be experienced along the way. After all, the aim is to have a comfortable retirement experience and what best way to do this than to have a plan. View website of professional financial advisors here.