So it’s no surprise that a NAR survey found that 33% of younger millennials received a gift or loan from a friend or relative to help with a down payment. This is consistent with a Pew Research Center finding that only 45% of millennials claim to be financially independent from their parents. [5]Most millennials and Gen Zers make half or less of the $114,000 average salary needed to buy a home today. [4]Unfortunately, young would-be home buyers are held back by stagnant wages, inflation, relatively high int ...

The IRS mandates withdrawals from pre-tax retirement accounts once you reach a certain age. These are referred to as required minimum distributions (RMDs). For many retirees, RMDs don't change much since they already take out more than the minimum to cover living costs. But, for those who want to withdraw less than the required amount or leave money invested, RMDs can pose a challenge. To help you calculate how much to withdraw from your own retirement accounts, let’s walk through an example of a 78-year-o ...

Roth conversions have significant and immediate tax implications. Consider reviewing the best options for your situation with a financial advisor who is obligated to work in your best interest.Like all post-tax portfolios, a Roth IRA is not subject to RMDs. So households trying to avoid minimum distributions often convert 401(k)s into a Roth IRA. You can do this at any age and in any amount. The only significant requirement is that the assets must come from a pre-tax portfolio, and the converted assets cann ...

Possible penalties: If the funds are pulled directly (meaning, into cash, rather than rolling over into your ex’s retirement account), you'll usually have to pay a 10% penalty plus possible income tax [4]. And if this amount pushes you over into a higher tax bracket, then be prepared to pay more when it’s time to file.Weaker long-term security: Taking out these funds now reduces your retirement cushion and may force you to work longer to afford the retirement you want.Loss of compound growth: Removing $70,0 ...

SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Converting a 401(k) into a Roth IRA can be appealing for several reasons. Not only can you make qualified withdrawals from Roth accounts tax-free, but Roth accounts are also exempt from required minimum distributions (RMDs.) That can give you more flexibility when withdrawing from your account in retirement and potentially save you money on taxes. Imagine you’re nearing retirement age and have $1.3 millio ...

We are a dual-income couple in our mid-50s with over $2 million in our 401(k)s. Should we “sacrifice” the pre-tax benefit and switch to Roth contributions at work? -Wendy Like most tax-related questions, the answer is “it depends.” Based on your situation, switching contributions to a Roth 401(k) could make sense for a few key reasons, including tax diversity and tax-free growth. However, there may be additional factors that make sticking with a traditional 401(k) and opening a Roth IRA on the side more de ...