Thu, 22 November 2007
-401k Retirement Plan Distributions
-Penalties for Early Withdrawals
-What qualifies for a Hardship Distribution?
Welcome back to the MBA Working Girl Podcast-Where Business Theory and the Real World Collide! I'm your host, Laura Adams.
Thanks to Small Business Trends Radio for your review of the show and for including us on your 100 Small Business Audio Podcasts list!
And we also appreciate the Bootstrapper blog for including us in your Top 100 Entrepreneur Podcast entry.
MBA Essential Tip:
Administrators of retirement plans now have the option to add a Roth component to 401(k) plans. If this is an option for you, should you take advantage of it?
With a regular 401(k), you get an immediate tax break because the investment is made from your income before it's been taxed. You contribute pre-tax dollars. Regular 401(k) funds are not taxed until you receive a distribution.
With a Roth 401(k), your investment is made from income after it's been taxed. So when you finally receive a distribution, you pay no tax - the tax break comes later.
If you think your tax rate is higher now than it will be when you start taking distributions, the regular plan is the smarter option. If you have to pay taxes, they should be lower rather than higher, right!
But if you think your tax rate will be higher when you'll take distributions, you'll want to consider the Roth option.
In this show I discuss a Personal Finance topic about some of the details of 401k Retirement Savings Plans. There are many specifics that can vary from employer to employer. So always be sure to research your own 401k plan when you have a question about what's possible.
I'll tell you what early distributions are not taxable and introduce you to situations that would qualify for a Hardship Distribution. We'll discuss penalties that involve additional taxes and suspension of your ability to contribute.
Thanks to those of you who are subscribed to the show through iTunes or now with Zune! I'd love your feedback about the show or suggestions for future show topics of interest. Email [email protected] or call in to the voice mail line at 1-206-888-2337.
Thanks for listening-
Do Good Work, Laura
Direct download: MBA_WGP_34_-_The_Responsibility_of_Tomorrow.mp3
Category: podcasts -- posted at: 2:43 PM