401K and IRA Flashcard

Front

What is one of the main benefits of a traditional 401K?

Back

It lowers your taxable income.

Front

At what age can you withdraw from a 401K without incurring a penalty?

Back

59 and a half.

Front

What is the maximum contribution limit for a traditional 401K for individuals under 50 in 2023?

Back

$22,500

Front

Which type of fund is recommended for investment within a 401K due to its diversification? Options: Sector-specific funds, Bond funds, Index funds, Money market funds

Back

Index funds

Front

What is a key difference between a traditional IRA and a 401K?

Back

A traditional IRA does not require an employer.

Front

What is the contribution limit for a traditional IRA in 2024 for individuals under the age of 50?

Back

$7,000

Front

When were Roth accounts created?

Back

1997

Front

What is the main tax benefit of a Roth 401K?

Back

Earnings are tax-free upon withdrawal

Front

What is the 5-year rule for a Roth IRA?

Back

You must wait 5 years after your first contribution to withdraw money tax-free.

Front

What is the income limit for contributing to a Roth IRA for single individuals in 2024?

Back

$146,000