59.5 Brings Half Birthdays Back into Style!

59.5 Brings Half Birthdays Back into Style! Hilltop Wealth Solutions

Turning sixty is an energizing experience. It not only carries with it more knowledge and anticipation for a new time of life, but it also presents vital money choices that can influence your life in retirement. On the off chance that you are arriving at 59.5 this year, you will be qualified to pull from your retirement funds without penalty. This gives you a chance to reorganize your funds and live an alternate life. Here are components to think about in this critical year of your life.

Your 401(k) and IRA Takes on New Meaning

When you come to retirement age, your 401(k) and IRA may be essential sources of income. You are not obligated to draw from these accounts if you are still gainfully employed and earning. You can select to move your 401(k) into an IRA. Generally, 401(k)s provide restricted investment choices that amount to about 8 to 12 portfolio choices.[1] These accounts require administrative fees that are a certain percentage of your assets, ranging from 0.2% – 5%. Although these fees are needed to keep the account running and to help it grow, some people may not prefer them.[2] Transferring a portion or all of your 401(k) into an IRA not only streamlines your finances but can also lower costs and give you a wider choice of investments.[3] Taking advantage of this can let you manage your investment risk and customize your accounts and tactics to your specific retirement objectives. On the other hand, you could make your 401(k) into an emergency cushion. Withdrawing money from either a 401(k) or a traditional IRA would come with tax effects, and it is essential to consult a financial professional before engaging with a retirement account income strategy.

Increase Your Retirement Funds with Catch-up Contributions

Beginning at the age of 50, you are allowed to make additional deposits to both your 401(k) and IRA with the goal of increasing your savings as you get close to retiring. The contribution limit for IRAs has been upped by $1,000 for 2022 and will be $7,500 in 2023.[4] With the annual 401(k) limit being $22,500 in 2023, the catch-up amount for 401(k)s is $7,500, allowing you to contribute a total of $30,000 to your 401(k) annually. When it comes to Roth IRAs, there are specific income levels that limit contributions. Single filers who earn between $138,000-$153,000 are subject to these limits.[5] This also applies to married couples who file jointly and earn $218,000 – $228,000.[6] Catch-up contributions assist in giving you more money to retire with and can be a good opportunity to capitalize on.

Turning 59.5 brings up important questions and decisions to make. It’s best to speak to a financial professional to know how best to tailor your 401(k) and IRA withdrawals and claims to your retirement goals. Speak to us today to gain better clarity.

 


[1] https://www.finra.org/investors/learn-to-invest/types-investments/retirement/401k-investing/investing-your-401k#:~:text=401(k)%20Fact&text=The%20average%20plan%20offers%20between,company%20stock%20and%20variable%20annuities.
[2] https://www.kiplinger.com/article/retirement/t047-c032-s014-what-should-you-do-when-you-turn-59.html
[3] https://smartasset.com/retirement/what-are-401k-fees
[4] https://www.whitecoatinvestor.com/2022-retirement-plan-contribution-limits/#:~:text=The%20total%20employee%20contribution%20limit,in%202023%2C%20a%20large%20increase
[5] https://www.whitecoatinvestor.com/2022-retirement-plan-contribution-limits/#:~:text=The%20total%20employee%20contribution%20limit,in%202023%2C%20a%20large%20increase
[6] https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work

Website Disclosures

Hilltop Wealth Solutions (“Company”) is an SEC registered investment adviser located in Mishawaka, IN with branch office located in MI and other locations throughout IN.  The Company may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.  The Company’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.  Accordingly, the publication of the Company’s web site on the Internet should not be construed by any consumer and/or prospective client as the Company’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by the Company with a prospective client shall be conducted by a representative that is either registered or qualified for an exemption or exclusion from registration in the state where the prospective client resides.  For information pertaining to the registration status of the Company, please contact the SEC or the state securities regulators for those states in which the Company maintains a notice filing.  A copy of the Company’s current written disclosure statement discussing Company business operations, services, and fees is available by going online via the SEC’s Investment Advisers Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC #801-115255.

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