Tips and resources that everyone can use
Knowledge Is Retirement Power
Roth options have become a common choice in many 401(k) plans, as well as 403(b) and 457 plans. The appeal with a Roth plan is the potential tax savings when distributions are made in retirement years. Money that goes into a Roth plan today is taxed today, but all earnings and future qualified distributions are free of tax. With traditional 401(k) plans, money goes in tax-free (and all future growth is free from tax), but qualified distributions are taxed at ordinary income rates. Check out AARP’s calculator at https://www.aarp.org/work/retirement-planning/roth_vs_traditional_401k_calculator.html to help determine which option might be right for you — and how it could affect your paycheck.
Quarterly Reminder
Are you expecting a tax refund this year? If so, consider creating an emergency fund with some or all of it. It’s important to have this money available for when something unexpected comes up, such as a car, refrigerator or dishwasher breaking down. Here are the key tips for an emergency fund:
- Aim to have 3–6 months of living expenses saved
- Keep separate from your checking account
- Ensure there are no (or low) transaction fees; no penalties for withdrawals
- Verify you will receive interest earnings on the balance (a little something is better than nothing).
Q&A
What is the most I can save this year in my 401(k) plan?
401(k) savers can contribute up to $20,500 in 2022. Savers age 50 and older can make an annual catch-up contribution up to $6,500 in 2022, for a total contribution of $27,000. These limits also apply to savers with a 403(b) plan and most 457 plans.
Tools and Techniques
More than 50% of U.S. small businesses are owned by people 55 and older, according to a Spring 2021 survey by SCORE, a nonprofit that provides resources to small-business owners. If your retirement dream is to
turn your hobby into a profitable business and finally be your own boss, check out score.org. You’ll find free access to volunteer mentors, workshops, virtual conferences, a start-up road map and many other tools for developing and launching a small business during retirement.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com
©2022 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.