Basic Retirement Planning
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Notes: - Employer contributions and earnings may be taxable when distributed, depending on whether they are invested in the pre-tax or Roth account
- SEP/SIMPLE IRAs and amounts rolled over to an IRA from an employer qualified plan or 403(b) plan, plus any earnings on the rollover, aren't subject to this dollar cap and are fully protected under federal law if you declare bankruptcy. This amount is scheduled to be adjusted for inflation in April 2022.
- Or from the time you contributed to a previous employer's Roth 401(k)
plan, if you rolled over your balance from that plan to the current plan.
- Depending on plan terms. Taxes and potential penalties apply to earnings
paid in a nonqualified distribution.
- Taxable conversion.
- Choices will depend on IRA trustee/custodian.
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Differences Between a Roth 401(k) and a Roth IRA
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Roth 401(k) |
Roth IRA
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Maximum contribution (2024) |
Lesser of $23,000 or 100% of compensation
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Lesser of $7,000 or 100% of earned income
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Catch-up contribution if age 50 or older (2024) |
$7,500
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$1,000
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Who can contribute?
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Any eligible employee
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Only taxpayers who earn less than:
- Single/Head of household:
$161,000
- Married (filing jointly):
$240,000
- Married (filing separately):
$10,000
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Potential employer matching contribution? |
Yes
1 |
No
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Federal bankruptcy protection |
Unlimited
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$1,512,350 (all IRAs aggregated)
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Loans available?
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Yes, if plan permits
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No
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Five-year waiting period for qualified distributions?
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Yes, from time you contribute to the plan
3 |
Yes, from time you contribute to ANY Roth IRA
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Distributions 4 |
Upon termination of employment, age 59½, hardship, disability, death, potentially other specific reasons
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Any reason
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Qualified tax-free distributions 4 |
59½, disability, and death
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59½, disability, death, first-time homebuyer (up to $10,000 lifetime)
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Nonqualified distributions |
Pro-rata distribution of tax-free contributions and taxable earnings
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Tax-free contributions distributed first, then taxable earnings
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Rollovers
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To a Roth IRA, Roth 401(k), or
Roth 403(b);
from a Roth 401(k) or
Roth 403(b)
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To and from a Roth IRA;
from a Roth 401(k) or Roth 403(b);
from a traditional IRA, 401(k), 403(b) or 457(b) 5 |
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Investment choices |
Limited to investments offered by employer
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Virtually unlimited6 |
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| IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This communication is strictly intended for individuals residing in the state(s) of CA, CT, FL, IL, IN, MA, MI, MO, NC, NV, NY, OR, PA, TX and WA. No offers may be made or accepted from any resident outside the specific states referenced. |
| Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2024. |
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