Mastering REtirement Savings

Navigating retirement savings is crucial for financial well-being. In this module, we'll explore key aspects of saving for retirement, offering insights into tax-advantaged accounts and how they shape your financial future.

401(k) Contributions:

Contributions to a traditional 401(k) are typically made with pre-tax dollars, reducing your taxable income for the year. However, these contributions are taxed when withdrawn during retirement. Roth 401(k) contributions are made with after-tax dollars, offering tax-free withdrawals in retirement.

Key Tax Forms: Form W-2, Form 1099-R.

INSTRUCTIONS https://www.irs.gov/pub/irs-pdf/i1099r.pdf

Individual Retirement Accounts (IRAs):

Traditional IRA contributions may be tax-deductible, providing an upfront tax benefit. Withdrawals in retirement are taxable. Roth IRA contributions are made with after-tax dollars, and qualified withdrawals are tax-free.

Key Tax Forms: Form 1099-R, Form 5498.

INSTRUCTIONS https://www.irs.gov/pub/irs-pdf/i1099r.pdf

Employer Contributions and Matching:

Employer contributions to retirement plans are not included in your taxable income. Matching contributions are essentially free money, contributing to your overall retirement savings.

Key Tax Form: Form W-2.

INSTRUCTIONS https://www.irs.gov/pub/irs-pdf/iw2w3.pdf

Early Withdrawals and Penalties:

Withdrawing funds from retirement accounts before the age of 59½ may result in early withdrawal penalties and additional income taxes. Exceptions exist, such as for first-time homebuyers or certain hardships.

Key Tax Form: Form 1099-R.

INSTRUCTIONS https://www.irs.gov/pub/irs-pdf/i1099r.pdf

Required Minimum Distributions (RMDs):

Once you reach a certain age, generally 72, you must start taking RMDs from traditional retirement accounts. Failure to do so can result in significant tax penalties. Roth IRAs do not have RMDs during the account owner's lifetime.

Key Tax Form: Form 1099-R.

INSTRUCTIONS https://www.irs.gov/pub/irs-pdf/i1099r.pdf