Because of the rules and requirements around 401(k)s, most people don’t think of this retirement plan as a useful tool when they’re on a mission to retire early. But failing to optimize your plan could mean missing a huge opportunity to grow wealth and achieve an early retirement goal.
Most advice with 401ks starts and stops with, “contribute at least enough to get your employer match.” That is good advice, and a great place to start your journey to financial success.
But it also only scratches the surface of what you can do with your 401(k), especially if you want to use it to help you retire early. (We’ll explain the math about how that’s possible in this episode.)
If you don’t know how much you can really put into a 401(k), you may be missing out. We shine a light on the 401(k)s facts most people don’t know, and uncover opportunities to save more so you can accelerate your progress toward your financial goals.
In this episode, we’re talking about:
- The real maximum you can contribute to a 401(k) each year – and it’s not just $20,500!
- The critical elements you need to look for within a 401(k) plan document, including what contributions are allowed, if employers make discretionary contributions, special withdrawal rules and conversions, and details on vesting schedules.
- The problem with relying on coworkers, or even HR, for info about what is or isn’t allowed with your 401(k)
- The kinds of employers who offer the best retirement plans to help you meet a goal of retiring early
- The overfunding mistakes we see clients make, and the manual math it takes to correct those
- The two main strategies to consider if you want to use your 401(k) to retire early – and access your money without penalties.
- The role tax planning plays in getting the most from your 401(k)… whether you want to retire early or not.
Most people take their 401(k)s for granted, and don’t ask enough questions about how to optimize those plans. If you’re ready to correct that mistake and start maximizing what you can do with your 401(k) – or even use it to help you retire early – this episode is for you.
Jump into the episode here:
Further Reading & Links from This Episode on Using Your 401(k) to Retire Early
- Here’s a rundown on what might be included in your 401(k) plan document.
- And here’s a whole lot of technical info on “substantially equal periodic payments” from the IRS if you’re interested in 72(t) distributions.
- Don’t do all the work to optimize your 401(k), and then forget about the actual investments within the plan. This episode might help you navigate risk, asset allocation, and managing emotions around the markets.
- When you change jobs, don’t leave your old 401(k) behind. Here’s how to think through the rollover decision.
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