taxes
9 questions
- 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
What are the IRA contribution limits?
In 2026, you can contribute up to $7,500 per year to an IRA if you're under 50, or $8,600 if you're 50 or older. This limit is shared across all your IRAs — you cannot contribute $7,500 to a Roth and another $7,500 to a traditional IRA in the same year.
- 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balance and IRS life expectancy tables — failing to take your RMD triggers a 25% penalty on the amount you should have withdrawn.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.
- Finance
What is a SEP IRA?
A SEP IRA (Simplified Employee Pension) is a retirement account for self-employed people and small business owners that allows contributions up to $72,000 in 2026 — far more than a regular IRA. It works like a traditional IRA: contributions are tax-deductible and withdrawals in retirement are taxed as ordinary income.
- Finance
What is a Roth IRA vs a traditional IRA?
A Roth IRA uses after-tax dollars and grows tax-free — you pay no tax on withdrawals in retirement. A traditional IRA gives you a tax deduction now and you pay taxes on withdrawal. Choose Roth if you expect to be in a higher tax bracket in retirement; choose traditional if you want the deduction today.
- Finance
What is tax-loss harvesting?
Tax-loss harvesting means selling an investment that has lost value to realize a capital loss, which you can use to offset capital gains or reduce your taxable income — reducing the taxes you owe today while keeping your portfolio's market exposure intact.
- Finance
What is the wash sale rule?
The wash sale rule disallows a tax loss if you buy a substantially identical security within 30 days before or after the sale — a 61-day window total. The loss isn't gone forever, but it's deferred until you sell the replacement shares.
- Finance
When can I withdraw from my IRA without penalty?
You can withdraw from any IRA without the 10% early withdrawal penalty at age 59½. For a Roth IRA, earnings also need to have been in the account for at least 5 years (the '5-year rule') to be tax-free. Roth IRA contributions — but not earnings — can be withdrawn at any age with no tax or penalty.