His Capital Group

2151 Consulate Dr. Suite 6 ​​​​​​​Orlando, FL 32837

His Capital Group

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His Capital Group


As of December 31, 2018, 401(k) plans held an estimated $5.2 trillion in assets and represented 19 percent of the $27.1 trillion in US retirement assets, which includes employer-sponsored retirement plans, individual retirement accounts (IRAs), and annuities. In comparison, 401(k) assets were $3.1 trillion and represented 17 percent of the US retirement market in 2010.

As of 2016, about 55 million American workers were active 401(k) participants, and there were nearly 555,000 401(k) plans.  Understanding the key differences between IRA & 401k plans may help you avoid info overload and get on the way to putting your money to work. So, let’s break down some of the key differences & keep in mind some of these differences can be costly if we think an option is available & it isn’t.

However, there is a work-around to avoid the penalty as some 401(k) plans allow partial rollovers to IRA accounts while the account holder is still employed and participating. By rolling over some of the 401(k) funds into an IRA, the individual then has the option to make withdrawals for higher education, a first-time home purchase or health insurance without incurring a 10% early-withdrawal penalty. Withdrawals, however, are taxable at ordinary income tax rates.

Another potential pitfall is associated with medical expenses.

When a person withdraws funds from his/her retirement plan, his or her AGI increases, and the 10% floor increases as well. For example, a $10,000 withdrawal increases AGI by $10,000, and the floor increases by $1,000. So, a taxpayer with an adjusted income of $50,000 prior to the withdrawal would only be able to claim a deduction if he/she had medical expenses that exceeds $6,000 (10% of $60,000). Yes, even those who do not itemize can use the exception.

Self-Directed investors often find real estate as a viable option to deploy capital to build wealth. Contact us today to learn how our clients have put their money to work successfully 407-494-3329 or s.ally@hiscapitalgroup.com.


Source: Elliot Raphaelson Tribune News

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