What is a 401k!? 🤔
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- Опубліковано 18 кві 2022
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A 401K is a retirement account offered to employees. A percentage is cut out from your paycheck and added to your 401K. A lot of employers even match your contribution, meaning you’ll be getting free money! You will be taxed when withdrawing, and can only be withdrawn at 60 unless you’re willing to pay a fee.
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#Shorts #finance #money #401k #retirment #job
Also the employer: "we can fire or lay you off for literally no reason and take back all the money we contributed"
Sht
Contributions vs Match is actually quite different, varies from employer to employer but if terminated most companies will only take the contributions they made and that’s only if you’re not vested (typically 5 years)
If you aren't fully vested
Yeah that’s only if you aren’t fully vested. Vesting periods matter
It ain't free money, you loaned it to them for like 30 years.
What are you taking about... Makes no sense
@@dhruvdnar A 401K is money that an employee chooses to withhold form their income until retirement and is matched up to 100% by their employer but that money cannot be spent by the employee until retirement. It's literally a loan you gave your employer and they reward you by matching your contribution.
@@HeyMavDak that's wrong on so many levels I can't even begin....
"Loan to your employer" is just insanely misinformed.
@@HeyMavDakor when they leave the company. Though there is a penalty of 10% tax if you do it before 59 and a half. You can always roll it over into your new company or an IRA
@@dhruvdnar He is right. Ur just stupid. Do you think the money will just grow on its own?? It is basically google doing quasi banking tactics to better the company performance and expenditures.
Workers need to stop being judgmental "we got another over here" yeah he was a big mouth spoiled kid.
Now a days company’s rarely match you dollar for dollar. 😢
Sad but true
Most of the time it’s 6% of total amount
Totally 100% true however it goes to show you how companies truly are nowadays.
@@ryannelson771what if you switch jobs? You loose the 401k or it can get transferred over?
WHY DON’T THEY TEACH YOU THIS IN SCHOOLS!!?
Stocks are rallying but I know better, macro shows the economy is yet to recover. I been holding stocks to sell at a profit at this time but it is looking like a bull market the rest of 2023. I am in a fight to hold or to sell. I’m up to 297 grand from a low of 250 thousand last year.
The market has been a turmoil since covid, the brief relief rallied for only a year and now the devastating effects of pumping trillions into the economy is here and will be for a while.
Stay in the mrkt and sell only if you need those funds. I got laid off and it has been difficult getting another source of income, glad I was investing when I did and of course with guidannce from a wealth-manager don’t listen to naysayers. I am making bank and the penalties for drawing from 401k to reinvest are nothing compared to the amount of wealth I now possess with my family.
I have seen a lot about FAs and actually want to consult some pro. How did you go about it? Is yours any good?
I have saved myself from all the hassle that the chaotic market causes. These days the best way to come into the market space is seeking guidance, due to side hustles i can’t handle my portfolio so i just work with LOREN LENA WALKER, a FA i came across via a recommendation from one of these UA-cam retirement coaches.
It’s been smooth since then. Cliche as it may I have made a mark up of 70% in profits investing 350k under her. It helps not to be worried about your portfolio every minute of the day.
how can i reach this person? I am actually thinking of going the route of an advisor, past 18 months rallies gave way to fresh lows, just as sentiment was starting to improve. I’m cautious.
While your 401(k) account will likely continue to grow after you stop contributing to it, that growth will be limited by the market, your plan’s balance and other factors, so i can perceive the preference for Annuities, I still want to know how best to compound at least $2m in retirement savings other than holding cash
For many years, bonds or other fixed-income assets could produce the yield needed to provide solid income for retirement needs.The importance of having financial safety could be why retirees are turning towards advisors in retirement planning
My inheritance, a whooping 1m has grown only 4.72% in the past 12 months. In this bear environment does investing w/ a brokerge account under a custodian outperform a 401k? should I seek a pro to grow my funds on brokerage or still hold? I have 5 years to retirement. Happy to discuss.
Mine was 8.16%, I used to dca into etfs but I reconsidered the strategy since I am still way behind after the massive downturn since Jan last year
I don’t want to touch it despite dwindling savings and losing both my jobs. I wish to grow it aggressively if I must draw it down, hence my question.
Private investing is the best way to go about the market right now, especially for near retirees, I’m invested in a hedge fund under a wealth manager. netted 370thousand the last downturn, made it clear there's more to the markets than we average joes know.
Be careful not to be lured into the market too soon, this current situation has really opened my eyes to the importance of a good mentor on UA-cam or elsewhere knowing what he/she is doing.
@clintscott3300 who is this manager you use? I lost over 75000 already this year, I’m in need of a planner going forward.
"We got another one." 💀
There’s different types of 401 k. Roth 401k u can contribute after tax dollars and withdraw that money in retirement without any taxes.
That being said when it comes to financial advice read into everyone’s pros and cons because not every shoe fits. Find the right strategy that fits your life currently. Make sure to continue to educate yourself as well!
This is so confusing though! I'm trying my best here but I don't get the difference between IRA and taxed IRA.
@@flamestar557 hey I def get it. Shit was confusing to me at first too because of the jargon issues and generally ignorant to these things! Try googling it I think it would do u a better job explaining than I ever would!
Shoot 55 I’m out the door lol
401k sounds like a scam.
How does this sounds like a scam? I’m not trying to argue against you or be contrary I genuinely don’t know. I’m still learning about all of this stuff because I was never taught
@@BackwardsHAT93your company can fire or lay you off for any or no reason during the time you're not vested and they will simply just take back all the money they contributed
@@BackwardsHAT93you still have to pay roughly the same tax when you withdraw if you even make it to 60
@@BackwardsHAT93employers use to offer a pension program that you would get automatically, but came up with this scam as a way for you to fund your own retirement yourself. What's stopping you from simply just opening an eTrade account?
@@BackwardsHAT93 most 401k have a garanted 7% return on invesment per year. Low risk, low reward. I learned how to make about 25 to 100% return on invesment per year. The financial advisor mosf firm have are old school and can't detect new trends. If you don't know how invesment works, 401k will do it for hou, for a fee.
Hardship withdrawal you don’t pay penalty of early withdrawal
Don’t for get the 1%-2.5% fees for all sorts of management resources that take a third or more of your contributions away when you get your distribution and then your higher tax rate consequence that comes out also.
This will be for all types of mutual funds, you can always just contribute to stocks but they put a limit on how much you can do it in stocks.
They told me they’ll do $0.50 to each $1.00 to up to 4 percent
Also the company benefits from it…they don’t pay taxes from the money they match you with
Hi sir .. if I have 70k and I withdraw everything just to invest somewhere like buying stocks , how much tax and penalties am I paying ?
You should do a rollover to an IRA account. No taxes or penalties that way. DO NOT CASH OUT.
I wonder the same. Like what % of tax/penalties will be taken out.
@@shutupnvibe The early withdrawal penalty is 10%, on top of whatever taxes you owe. If it is large enough, you will pay another penalty for owing too much, at the end of the year. The IRS never pays you any interest if your refund is more than a certain amount, but they will certainly fine you if you owe them too much. They expect you to file an estimated tax payment in the quarter that you cash out.
A rollover into an IRA is the best move. You avoid all the pain that way, and you have total control over your investment there.
Where is the money kept though?
Thats like asking where in the bank is all your money lol
Most companies hire a management firm, like Fidelity Net Benefits. The management firm usually offers a variety of funds for you to invest your money in. Most of them have a target date based on when you plan to retire. If retirement is a long way away, the fund invests aggressively in riskier things, like stocks. As it gets nearer to the retirement date, it shifts to more stable things like bonds.
You will get regular statements on your account so you can see what is happening with it.
Good video but remember not all company’s match most give a very close number but matching isn’t always the case
Actually they almost never match
@@anthonycooper6963 wow glad I decided to put extra towards mine when I was living with my parents because the company I worked for matched my contributions up to a certain amount.
You're absolutely right! Make sure to clear that up before getting the job.
they almost never contribute, even a dime. if that's the case, max out that roth. its only 6k a year
My dream companies match you on your 18% to make your 401k 36% of your salary than any dollar you put in after that they match. I will be blessed.
Just ask for a post tax 401k most companies offer that, and if they don't offer that don't work there
Dont forget inflation
Nobody cares about inflation, do you know what inflation means?
So does that mean it's 1000$ in the bag right?
My 500$+companies500$=1000$ right?
or is there some kind of Wall Street fine print scam I'm not understanding?
No, this is the shitty version of a pension. Instead of the employer contributing 100% of the retirement, you have to take away from your pay and put it into the retirement.
Companies generally match 3-6%. So if you agreed to invest 6% of your income into your 401k and that comes to $500, your company would contribute another $500, so the total monthly contribution into your 401k would be $1000. It's an instant 100% return on your money.
If you contribute 10% of your income, your company would still only match 6%, so you would be contributing $750, and your company would be contributing $500, for a total of $1250 per month.
The company match is a 100% return on that portion of your money. If you are not participating in your 401k, you are dumb.
Companies now offer Roth 401ks. You don't get to deduct your contributions at tax time, but all the money in the account comes out tax free. The company contribution has to go into a Traditional 401k, though.
@@elchicovip01can I just do this on my own then?
@@xocheenahox No, in 401k your employer provides a portion or match your contribution up to a percentage. The 401k company allow you to select where or what kind of invesment. The benefit is the employer double your savings and the 401k invest it on a safe invesment with a minimun return of 7%. Every year. This beats savings account and is great for people who don't know or don't want to deal with the stock market. The con is that you get a penalty for withdrawing before your retirement. Since I can easily beat 401k due to my stock market knowledge, I don't use 401k.
@@xocheenahox You can open an IRA account and put money into it. That gives you total control over how it is invested, but you can only contribute $6500 per year ($7500 if you are over 50). You can invest up to $22,500 per year in your 401k ($30,000 if you are over 50). So, it gives you a much bigger bucket to work with. If you have the money, you can max out both accounts.
Does my 401k change if i change jobs?
You can leave it where it is, roll it over into your new employer's plan, or roll it over to your IRA (my recommendation). DO NOT CASH IT OUT. That will trigger a tax event, with penalties.
@@damondiehl5637 thanks for this
401k’s don’t make sense from people who understand taxes and macroeconomics
yeah and what do you think taxes will be when you’re 65 if you make it. cash out now lol
who has a 25% match 😂😂😂
So they can give you free money but only for retirement? Might as well just add that to the wages of empleyes when they need it not decades into future looks like 401k is better for jobs that pay way more maybe like 300k a year or more because of taxes and fees charged to 401k i hear.
Stupidest retirement plan. Instead max find a IUL and you will be set
I don’t understand why we are paying taxes when we withdraw it though
You would withdraw when you retire as you’ll be in a much lower tax bracket. In other words, the amount you receive is taxed significantly less
So the a huge advantage of a 401k essentially is to lower ur taxable income to a certain bracket?? (Along obtain with money for retirement)
It's money that hasn't been taxed yet
If it is a Traditional 401k, you get to deduct your contributions at tax time, which lowers you adjusted gross income. But then you pay tax on everything as it comes out, in retirement.
Lots of companies now offer Roth 401ks. You don't get to deduct your contributions at tax time, but everything comes out tax free. The company match still has to go into a Traditional 401k, though.
"FREE MONEY" bro used a indian accent 💀
Its not automatically…. You have to agree or disagree to contribute.
LOL 😂 someone forgot about Roth. Noob
They did tell me all this in school
401k is gay!