401(k) Plans and How They Work

The 401(k) plan has become the primary way most people save for retirement, as well as the primary way companies provide retirement benefits for their employees. This video tells you a bit about them and how they work, as well as the consequences of making early withdrawals from these accounts.

2024 UPDATE:

The maximum employee contribution to a 401(k) for 2024 is $23,000
Employees over 50 may make an additional $7,500 "catch-up" contribution.

SECURE 2.0 UPDATE: Plans now have the option to allow their participants up to one, $1,000 emergency withdrawal without penalty. Plans can also let their participants set up Roth-style "Emergency Savings Accounts where participants can defer up to 3% of compensation to a maximum of $2,500 which can be withdrawn at any time without tax or penalty.

Resources and additional information:

Intro and background music: “Bluesy Vibes” - Doug Maxwell - YouTube Audio Library

DISCLAIMER:

The information presented in this video is for informational and educational purposes only, and is not intended to render tax advice for specific situations. If you have questions about your specific tax situation, please consult the resources linked above or consult with a qualified tax professional in your community.

The information contained in this video is based on tax law and IRS regulations as of the date of publication, and may be subject to change.

[TheTaxGeek]

2024 UPDATE:

The maximum employee contribution to a 401(k) plan is $23, 000 for 2024.
Employees over age 50 may make an additional "catch up" contribution of $7, 500 2024.

SECURE 2.0 UPDATE: Plans now have the option to allow their participants up to one, $1, 000 emergency withdrawal without penalty. Plans can also let their participants set up Roth-style "Emergency Savings Accounts where participants can defer up to 3% of compensation to a maximum of $2, 500 which can be withdrawn at any time without tax or penalty.

[tom]

Borrowing from your own money and paying interest for it😂