GOT MONEY? 401K/IRA BEN. & PEN.

Individual wealth & generational wealth passed along is very important to living a high-quality, secure, comfortable, lifestyle for you and your family! Wealth will not solve all problems, but it is the backbone to higher education & accessing more benefits & resources to empower oneself & their community. Therefore today, I will give the 411(info.) on 401k's & IRA's, as this is one of the best ways to generate wealth over time.

• Beware of an early 401k/IRA distribution before the age of 59 & 1/2 , as this will lead to an early distribution penalty of 10%.

• This 401k/IRA early distribution penalty of 10% is in addition to your current tax obligation of... 10%, 12% 22%...

• Exploring a personal loan of <10% is beneficial for accessing your money & minimizing the early distribution penalty (if under 59 & 1/2 years old at time of distribution). Talk to your 401K/IRA trustee about any loan options being made for <10% per annum on the basis of your assets. Note: If you can't pay back the loan in full for-the-year-of to the lender, it may be cheaper to just receive the 10% early distribution penalty from the IRS. (Ex. 7% loan from your lender per annum for 24 months (2 years) totals 14% which is more than the 10% early distribution penalty the IRS will impose.) Do the Math!

• Know how much of your employer's 401k contribution is vested to you & over what time frame! (Ex. My employer will match my 401k contributions dollar for dollar with me being "FULLY VESTED" only after 10 years of service. So, I put in $100 over 1 year... & my employer matches my contributions for $100 over that same year, as well, totaling $200 in my 401k account. Nevertheless, I decided to leave or was separated from the company only after 1 year of service, so all my $100 that I put in the 401k is all mine to receive back {assuming my account was static with no loss or gain based on the current market conditions}; however, only $10 from my employer's contribution of $100 is only mine to receive because that is the amount that is FULLY VESTED. Hint: "10 years to be 100% vested" = (FULLY VESTED). Which means 10% per year for 10 years to be 100% vested {10% x 10yrs. = %100}; therefore, 1 year equals 10%... 10% of $100 is $10. I will only walk away with $110 in total, & not $200 because only 10% of my employers $100 contribution was "FULLY VESTED" after 1 year, & this is what I'm entitled to receive by law!) Please view your companies 401k investment prospectus thoroughly because "THE DEVIL IS IN THE DETAILS!"

• Contributions to your 401K & IRA are tax deductions for income purposes the year of (certain limits apply). Hint: A well timed contribution to your 401k could move you from a 22% tax bracket down to just a 12% tax bracket the year of based on your income. This will save you 10% in taxable income for that year; all the while, growing your money for the future. "Tax Planning 101"

• 401k's & IRA's generate compound earnings & interest! Compound earnings & interest, together, is the single most important contributor to wealth building in the U.S.!

If you want to educate & empower yourself; as well as someone else in your community, then simply share and/or send this post/link to friends, family, & loved ones! "We will build it together!" Also, I would like to take this time to remind you all of our mission statement & community values at Solid Tax Services! Thank you!

In Trust,

Ashley Thomas, EA

Ashley Thomas, EA