401k
8 questions
- Finance
How do I invest for retirement in my 20s?
In your 20s, your most valuable asset is time — a dollar invested at 22 is worth roughly four times more at retirement than a dollar invested at 42. The playbook is straightforward: capture your 401k employer match, open a Roth IRA, buy low-cost index funds, and invest consistently.
- Finance
How does a 401k work?
A 401k lets you contribute pre-tax income to a retirement account through your employer — money grows tax-free until withdrawal after 59½. Always contribute at least enough to capture the full employer match.
- Finance
How much should I save for retirement?
Save 15% of your gross income for retirement as a starting target — including any employer match. If you started late, aim higher. The exact number depends on your desired lifestyle and retirement age, but 15% invested consistently from your 20s puts you in strong shape.
- Finance
Should I pay off debt or invest?
Pay off high-interest debt first — any debt above 7–8% APR is a guaranteed return that beats most investments. Below that threshold, investing alongside debt payoff makes sense, especially when an employer 401k match is available.
- Finance
What are catch-up contributions?
Catch-up contributions let people aged 50 and older contribute extra money to retirement accounts beyond the standard annual limits. For 2025, the catch-up for 401(k) and 403(b) plans is $7,500, with a special higher catch-up of $11,250 for ages 60–63 introduced by the SECURE 2.0 Act.
- Finance
What happens to my 401k if I quit my job?
Your 401k money is yours when you quit — you do not lose it. You have four options: roll it to your new employer's plan, roll it to an IRA, leave it in the old plan, or cash it out. Cashing out triggers income taxes plus a 10% early withdrawal penalty and is almost always the wrong move.
- Finance
What is a required minimum distribution (RMD)?
A required minimum distribution (RMD) is a mandatory annual withdrawal the IRS requires you to take from traditional IRAs, SEP IRAs, and most 401k accounts starting at age 73. The amount is calculated each year based on your account balance and IRS life expectancy tables — failing to take your RMD triggers a 25% penalty on the amount you should have withdrawn.
- Finance
What is a Roth 401(k) and should I use one?
A Roth 401(k) is a workplace retirement account where contributions are made after tax, so withdrawals in retirement are tax-free. Unlike a Roth IRA, there are no income limits — anyone whose employer offers one can contribute regardless of earnings.