Tax-Advantaged 401(k) Contributions: Minimize Bonus Taxes
The Internal Revenue Service classifies a bonus as taxable compensation, so Uncle Sam is going to want a big chunk of it. Bonuses are added on top of your other income and are taxed at the percentage rate for your highest tax bracket -- or even more if the bonus money pushes you into the next bracket. However, you may be able to avoid taxes by putting your bonus into a 401(k).
Sheltering Your Bonus
The IRS has no rule against adding your bonus to a 401(k), but some company plans won't allow you to do so. Contact your 401(k) plan administrator to find out. In addition, the IRS sets a maximum annual limit for 401(k) contributions that is adjusted periodically for inflation. At the time of publication, the limit was $17,500, going up to $23,000 for those over age 50. The amount of bonus money plus other contributions to the 401(k) cannot exceed the limit. For example, if your limit is $17,500 and you already contributed $9,000, you can contribute a maximum of $8,500 in bonus money for the year.
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Bank Account Liens: Understanding Creditor Rights & Protection
Bank account liens give creditors another option for collecting on delinquent debts. Instead of garnishing your wages when you haven't paid a debt, a creditor may choose to garnish your b
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Social Security Disability & 401(k): Protecting Your Retirement Savings
Your 401(k) should be safe, even if you are drawing Social Security disability. If you are awarded a Social Security disability claim, you will be entitled to monthly benefits paid by the age
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401(k) Partial Withdrawal & Rollover: Understanding Your OptionsSplitting a 401(k) distribution can be tricky. You can roll over a part of a 401(k) distribution into a qualified retirement account, but the rollover is subject to certain restrictions. Norm...
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Protecting Your Retirement: Can Lawsuits Affect Your 401(k) or IRA?Businessman studying his finances on his tablet It's frightening to consider that all the money you've been putting away over the years and all the retirement benefits you've been...