The following is an excerpt from How to Use Your 401k in Your 50s and 60s:
If you’re like most working Americans, chances are good that you’ve had access to a workplace retirement plan such as a 401k for decades. Hopefully, you’ve been faithfully contributing over the years and, by now, you have a decent-sized, tax-deferred nest egg.
But if you’re in the 50s or 60s, retirement is getting closer by the day, and the way you think about your 401k should be evolving. Yes, it’s still the same tax-sheltered, nest-egg-accumulating vehicle it always was.
But it’s also a distribution vehicle. And how you handle your distributions can potentially save you a small fortune in taxes.
Using Your 401k: The Basics
Before we get to that, let’s start with the contribution basics. In tax year 2017, you can contribute up to $18,000 to a 401k plan via salary deferral. The IRS hasn’t officially announced the 2018 limits, but it’s safe to assume it will be something in the ballpark of $18,500.
Of course, if you’re 50 or older, you can contribute an extra $6,000, bringing your total to $24,000 in 2017 and — presumably — $24,500 in 2018.
And remember, this is just your contribution and it doesn’t include any employer matching or profit sharing. Depending on your salary and your employer’s generosity, that can add thousands in additional contributions.
To read the rest of the article, see How to Use Your 401k in Your 50s and 60s
Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.
Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.