401k Retirement Plan

401(k) Retirement Plan⏐Suncoast Investment Services

Suncoast Investment Services
At Suncoast Investment Services, we are committed to providing a high level of service that stands apart from the rest. Our team of professionals is comprised of a diverse group of individuals who collectively have decades of experience in the financial services industry. We offer comprehensive wealth management and retirement planning strategies. At Suncoast Investment Services, we take serving our clients to heart. We put your needs ahead of our own and provide sound financial advice that we ourselves would follow. It is our pleasure to work side by side with our clients, ensuring that each unique situation is addressed. Your financial plan should be as individual as you are, and at Suncoast Investment Services, we make sure of that. One of our specialties is retirement planning.

401(k) Retirement Plan
What is a 401(k) retirement plan?
A 401(k) retirement plan is a retirement savings account that allows an individual to contribute a part of their salary to a retirement savings vehicle with investment options for the funds to grow over time. These are employer-sponsored accounts. Often, an employer will match a percentage of the employee’s contribution. Employer matches, of course, are limited. Limitations vary based on the employer.

How do 401(k) plans work?
A 401(k) is called a “qualified” retirement plan. This means that it is eligible for certain tax benefits through the Internal Revenue Service. There are two kinds of qualified plans, defined contribution or defined benefit. A defined-contribution plan is a retirement plan that is usually tax-deferred that allows individuals to contribute a fixed amount or a portion of the individual’s paycheck into an individual retirement account. A defined benefit plan is an employer-sponsored retirement plan in which employee benefits are calculated considering several factors and are also known as pension plans. A 401(k) plan is a defined contribution plan.

401(k) at retirement
How your 401(k) works for you after retirement depends on many factors. Your age, for example, is one of the largest factors that will determine how your 401(k) works at retirement. There are some different options available to you based on what your individual income needs are at retirement.

401(k) Contribution Limits
The IRS evaluates and sometimes alters the maximum allowable 401(k) contribution limits annually. To ensure that you do not incur any unnecessary tax penalties, it is important to know and understand these limits. A financial advisor can help you navigate 401(k) contribution limits.

401(k) Withdrawal Rules
Distribution rules for 401(k) plans are different from the withdrawal rules that apply to individual retirement accounts. Either way, though, early withdrawals of funds from any kind of retirement savings vehicle will incur fees of some sort come tax time. This tax penalty applies to individuals who are aged younger than 59 ½ years. Withdrawal from a 401(k) plan requires what is called a “triggering event,” such as leaving a job, retiring from a career, death or disability, certain hardships, or if the plan is terminated.

401(k) Investment Options
Companies that offer 401(k) retirement plans offer several investment options. The employee can choose one or multiple funds to invest their money in. Many of the options are mutual funds, including index funds, large-cap and small-cap funds, foreign funds, real estate funds, and bond funds. These can range anywhere from aggressive growth funds to conservative income funds. Your allocations will depend mainly on your risk comfort level. A financial advisor will help you choose the suitable 401(k) investment options for you.

401(k) Plan Loans
If it is allowable by your employer, you might be able to take a loan based on funds in your 401(k) plan. If allowed, this option generally allows up to 50% of the vested balance up to certain limits.

Use a Financial Advisor
Using a financial advisor to develop a sound financial plan for your retirement needs will help you pursue success in your retirement endeavors. Don’t try to navigate retirement planning on your own. Your quality of life at retirement is simply too substantial. A financial advisor will create a comprehensive financial plan that fits your individual retirement needs and desires.