Timothy Sumer

How often have you heard you should take advantage of your 401k max contribution rate? We hear it all the time! Unfortunately 401k plans have been oversold as the suitable replacement for the disappearing pension. The max contribution you can make intro your 401k is almost always far larger than any employer match. So the questions becomes: "what is the optimal way to save for retirement?" Should you max out your 401k? That depends!!! Do you want to retire early? If so, where will your early retirement withdrawals come from? It is possible to make a separation from service distribution at or after age 55, but the request needs to be done correctly to avoid any 10% penalty. Are you a high earner? If so, does making a max contribution to a tax deferred vehicle really make sense? Do you have faith that our government spending will get under control? Tax deferred vehicles have their place, but too much tax deferred money can set you up for a major tax headache

See maximum limits and, more importantly, what goes into the 401(k) max contribution. For 2023, the annual limit is up to $22,500 of your own pay, and the total amount that can go into your account is $66,000. For those over age 50, another $7,500 catch-up is allowed. But this can get complicated, and if you’re hoping to max out your 401(k), it’s helpful to understand all of the pieces involved. Get free retirement planning resources: 🔑 9 Keys to Retirement Planning 🐢 6 Safest Investments Contributions can be employee or employer contributions (or both). When your employer contributes, you might get matching money, profit-sharing dollars, or other types of contributions to your account. 🌞 Subscribe to this channel (it's free): Employee money can often go in pre-tax or as Roth-type money. The choice you make depends on what’s available and what makes the most sense for your strategy. And some plans allow voluntary after-tax contributions. You don’t get a deduct