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Hello Everyone, Joshua Abel with the Forever Wealth Team, a financial planner in Naples
Florida. You know, when it comes to saving for retirement a lot of confusion come up.
There's so many different elements and aspects and laws that most people aren't aware of.
Over the next couple of videos I'm going to offer you a couple of tips in successfully
saving for your retirement. There are a couple of rules especially when dealing with the
401(k) or a traditional IRA and many people know these rules but some people don't. First
of all, the money in a 401(k) is tax-deferred meaning that you are not paying taxes now
but you will have to pay taxes when you start taking out from the 401(k). In addition, there's
also a 59 1/2 rule and a 70 1/2 rule. So if you take out money before you're 59 1/2 you're
automatically going to be penalized 10 - 20% of your distributions and on top of that you'll
have to pay taxes. Now if you wait too long and don't take out what's known as your required
minimum distribution you will automatically be slapped with a 50% penalty on that distribution
and then taxed on top of it. Now, if you wait anywhere in between there between 59 1/2 and
70 1/2 the only thing that you are going to have to worry about is taxes and who knows
what tax rates are going to be. They could be low like they are now or they could be
much higher 40 - 50%. So make sure to keep that in mind when you are contributing to
your 401(k) or IRA. I hope this has been helpful. If you got any value out of this make sure
to share and comment below and I'll talk to you in the next video. Thanks so much!