How to Use 401k Features for Retirement Planning

Navigating your 401k isn't just about ticking boxes. It's a strategic play in securing your future comfort. Let's dive into some real talk about those 401k moves that could be slipping through the cracks: 1. Beyond the Employer Match: → Just meeting the match? You might be shortchanging your golden years. → Think bigger. Max out if you can. It's about compounding your security, not just meeting the minimum. 2. Catch-Up Isn't a Condiment: → Over 50? Supercharge that retirement savings. → These extra contributions? They're a boost to a cushier retirement. 3. The Job Hop Trap: → Swapping jobs? Resist the urge to cash out. → Penalties and taxes aren't part of the dream. Roll it over, keep it growing. 4. Costs That Creep: → Those sneaky fees can nibble away at your nest egg. → Get clear on the costs. Your future self will thank you. 5. DIY to Advisor: → Overwhelmed by options? A pro might be your play. → Tailored advice can turn a good plan into a great one. 6. Resist the Raid: → Thinking of dipping into that 401k? Pause. Reflect. → It's meant for future you. Protect it like a treasure. It's not just about setting up a 401k; it's about making it work as hard as you do. And while we're talking truths, remember this: Your 401k is more than a line item on your paycheck. It's the seed of your future freedom. Cultivate it with care. So, what's your next move to power up your 401k strategy?

“Doing everything right” can still leave you exposed… A tech exec came to me for a second look. He was proud he had “done everything right”: ✅ Maxed out his 401(k) ✅ Maxed out ESPP contributions ✅ Used his HSA ✅ Received and retained significant RSUs ✅ Created estate planning documents On paper, it looked great. But here’s what he missed... and what we fixed: 1. Mega Back-Door Roth contributions We signed him up TODAY to save another $40k annually in Roth 401(k) dollars. He's going to amass a solid Roth balance to use Tax Free in the future. 2. Back-Door Roth IRA for his partner Adding $7k for 2025 and $7,500 for 2026, immediately converting to Roth. More tax-free growth and accumulation. 3. Maxing out HSA He contributed $1,500/year and spent it. We flipped the script: starting in 2026, he’ll max out his HSA and accumulate it long-term for future healthcare costs. 4. Consistent taxable brokerage savings “Save whatever’s left” worked okay, but we wanted to prioritize and solidify regular saving. We set up a $3k monthly pull into a diversified portfolio. 5. Idle cash He had $70k sitting stagnant in checking. We dropped it to $20k for liquidity and moved $50k to a money market earning 3.5%. Still accessible, but now working for him, adding $1-2k in annual interest. 6. Diversifying RSUs He had $4M in company stock and felt frozen: “What if it keeps going up?" But... "what if it tanks?” We built a multi-year diversification plan to reduce risk, spread out taxes, and keep enough stock to avoid FOMO. Beyond the numbers, we did some dreaming... 🏡 Upsizing his home ✈️ Traveling more 🎨 Investing in neglected hobbies Suddenly, these felt more accessible after unlocking some of his RSUs. We tuned up insurance policies, updated beneficiaries, and started a tax strategy that could save six figures (maybe seven) over time. Of all the wins, I’m most excited about his hobby budget. Because money should fuel joy, not just sit in accounts. If you could add more to your hobby budget, what would you do more of? Advisor friends - would you like to learn more about how I showcase my tax planning expertise on the discovery call? join me for a webinar on 1/20/26 where I talk about how I tee this all up! Register here: https://hubs.la/Q03_jdwc0 __ I love attending random Skillpop classes here in Charlotte with my mother-in-law. Our recent class was on watercolor bookmarks.

Your retirement accounts are NOT locked up until age 59 1/2! It's just the age when you stop needing an exception to avoid the 10% additional tax ("penalty"). Thankfully, there are multiple ways to access retirement account funds in early retirement without triggering the penalty: • Rule of 55: If you separate from service in the year you turn 55 or later, you can access penalty-free withdrawals from that employer's 401(k) - if the plan allows. Since these withdrawals are subject to a 20% mandatory federal income tax withholding, consider filing your tax return early to receive a likely refund. • Governmental 457(b): These unique accounts allow penalty-free withdrawals after separation from service, regardless of age. • Inherited IRA: Since distributions after death are exempt from the penalty, these accounts are often prioritized in early retirement, plus they are often subject to RMDs and a 10-year rule. • Roth IRA Basis: You can always withdraw your original contributions without tax or penalty, regardless of age or reason. • Roth IRA Conversion Ladder: Before age 59 1/2, each taxable Roth conversion has its own 5-year holding period before that amount becomes available to be withdrawn from the Roth IRA penalty-free. • 72(t) Payment Plans (SEPPs): These allow penalty-free withdrawals before age 59 1/2 but must continue for the longer of 5 years or until age 59 1/2. So if someone tells you "the government won't let you access your own money in early retirement," they're likely using fear-based tactics to sell you an unnecessary alternative. #EarlyRetirement #FinancialPlanning #TaxPlanning

I recently met with a potential client and reviewed her 401(k). Within minutes, three things stood out: 1. Her ex-spouse was still listed as the beneficiary. A quick reminder: beneficiary designations often override your will—review them regularly. 2. 15% of her balance was sitting in an after-tax bucket. That creates an opportunity to convert those funds to Roth (pending tax considerations). In some plans, you can even automate this going forward. 3. She was contributing 14% of her salary to her Roth 401(k)... and it was creating cash flow stress. She had started to carry credit card debt. The interesting part? She could still max out ($24,500) by contributing just 8%. Redirecting that extra 6% back into her paycheck could help eliminate high-interest debt without sacrificing her long-term goals. There were two more opportunities we uncovered—but we'll save those for another day. I love financial planning because it reminds me of reading an MRI. The data is the same for everyone—but interpretation is what makes the difference. A student, a resident, and a seasoned physician will each see something different. Wealth planning works the same way. The information is available. The insight is not. This is why a second set of eyes can make a meaningful difference.

The IRS just raised 401k limits for 2026 Starting January 1st, you can defer $24,500 into your workplace retirement plan, up from $23,500 this year. If you're 50+, tack on another $8,000. And if you're 60-63? You get an even bigger boost: $11,250 in catch-up contributions thanks to Secure 2.0. Sounds great, right? Here's the reality check: Only 14% of participants actually maxed out their 401ks in 2024, according to Vanguard's latest research covering nearly 5 million workers. The average combined savings rate (employee + employer) sits around 12-14%. That means most Americans are leaving significant tax-advantaged growth on the table, not because they don't want to save, but because they simply can't afford to max out in today's economy. Three takeaways for investors: First, if you're one of the 14% who can max out, congratulations, you're building serious wealth through tax-deferred compounding. Keep going. Second, if you're not there yet, focus on capturing your full employer match first. That's free money you can't afford to miss, even if maxing out isn't realistic. Third, and this is critical, maxing out isn't always the best strategy for everyone. Sometimes liquidity is more valuable than locking everything away in a retirement account. Building an emergency fund, saving for a down payment, or maintaining cash flow flexibility might be smarter moves depending on your situation. The bottom line: Higher contribution limits are a tool, not a mandate. The right strategy depends entirely on your unique financial picture, goals, and timeline. I'm happy to discuss what makes sense for your specific situation, so feel free to reach out or drop a comment below. #RetirementPlanning #401k #Wealth

Most people fund a 401(k) without truly understanding it. That’s a costly mistake. Your 401(k) isn’t just a benefit. It’s one of the biggest wealth systems you’ll ever touch. Use this cheat sheet before assumptions cost you decades of compounding. Questions to ask HR about your 401(k): 1. What is the employer match, and how does it work? ↳ Not all matches are equal. ↳ Understand the % match, caps, and vesting rules. 2. When do my contributions fully vest? ↳ Some employer dollars aren’t truly yours for years. 3. What investment options are available? ↳ Limited fund menus quietly cap long-term returns. 4. What are the expense ratios on each fund? ↳ Small fees compound into big losses over time. 5. Is there a default investment, and why? ↳ Defaults favor simplicity, not optimization. 6. Can I adjust my contribution anytime? ↳ Flexibility matters during income shifts and life changes. 7. Are Roth 401(k) options available? ↳ Tax timing can matter more than tax rates. 8. How often can I rebalance my portfolio? ↳ Rebalancing keeps risk aligned as markets move. 9. What happens if I leave the company? ↳ Know rollover rules before transitions happen. 10. Where can I get unbiased guidance? ↳ Education beats assumptions. ↳ Clarity beats guesswork. Your 401(k) is not “set and forget.” It’s a system. And systems reward informed operators. Which of these questions surprised you most? Follow me Marc Henn for more. We want to help you Retire Early, Supercharge Your Cash Flow, and Minimize Taxes. Marc Henn is a licensed Investment Adviser with Harvest Financial Advisors, a registered entity with the U. S. Securities and Exchange Commission.

The 401(k) catch-up contribution rules changed significantly in 2026. Most people over 50 haven't adjusted their strategy yet. Here's what needs to change and why it matters more than it looks. Three New Rules. All Effective January 1, 2026. 1. Higher Standard Catch-Up The catch-up limit for taxpayers age 50+ increased to $8,000, making the total 401(k) contribution ceiling $32,500 for 2026. 2. The Super Catch-Up for Ages 60-63 Taxpayers who turn 60, 61, 62, or 63 in 2026 qualify for an enhanced "super catch-up" of $11,250, not in addition to the standard catch-up, but replacing it. Total contribution ceiling for this group: $35,750. Age 64 doesn't qualify. Neither does 59. The four-year window is precise and worth planning around for anyone approaching it. 3. Mandatory Roth for High Earners - This Is the Big One Beginning January 1, 2026, workers age 50 or older who earned more than $150,000 in FICA wages in 2025 must make all catch-up contributions on a Roth basis, no exceptions. Pre-tax catch-ups are gone for high earners. The upfront tax deduction disappears. Those dollars are now taxed today, not in retirement. The rule is based on prior-year W-2 FICA wages from the employer sponsoring the plan, not MAGI. Review Box 3 of the 2025 W-2 to determine whether the rule applies. The Plan Design Problem Nobody Is Talking About!! Plans that don't offer a Roth option create a compliance problem: high earners subject to the mandatory Roth rule simply cannot make catch-up contributions at all if there's no Roth feature in the plan. Employers must amend plan documents by December 31, 2026, update payroll systems to route contributions correctly, and coordinate with recordkeepers to ensure proper tax treatment. For small businesses and closely held companies, this is an active action item, not a 2027 problem. The Tax Planning Angle: Mandatory Roth treatment isn't necessarily bad. For high earners who expect continued income growth, or who are building tax diversification across pre-tax and after-tax buckets, the forced Roth contribution may actually be the right outcome strategically. The question worth asking: Does paying taxes now on catch-up dollars at the current rate produce a better long-term result than deferring and paying at an unknown future rate? For most high earners still in peak earning years, the answer often favors Roth, even if it wasn't their first choice. IRA catch-up contributions are not affected by the Roth mandate, the 2026 IRA catch-up limit is $1,100, available as traditional or Roth regardless of income. #401k #RetirementPlanning #SECURE2 #CatchUpContributions #RothIRA #TaxPlanning #HighIncomeEarners #RetirementSavings #CPAinsights #TaxStrategy #FinancialPlanning #SuperCatchUp

Most people are not aware of this secret in their 401(k). Here is what you need to know: Compared to the IRA, the 401k has a couple of advantages including: - Larger contribution limitations - Matching contributions - No income limitation In addition, it still offers a Roth component. But the part people overlook? The total contribution limit. On the employee side, it's $23,500 (2025) Combined with the employer side it's $70,000. But there is another secret in it. If your employer allows it, they may permit additional after-tax contributions. This is taking additional income that has already been taxed and contributing it to a 401k. For example: If the employee contributes $23,500 and the match is $7,500, that's $31,000. $70,000-$31,000 = $39,000. The employee can contribute an extra amount into there. But that's not where the magic happens. The magic is what you can do after. These contributions can be converted to a Roth account. This can happen in two ways: 1) In-Service Distribution: Make an after-tax contribution + transfer it to an outside Roth IRA Or 2) In-Plan Roth Conversion: Make after-tax contribution + transfer funds to the Roth 401k of plan Once again, your employer must allow both after-tax contributions and this type of transfer so check with them first. This strategy make large contributions to a tax-free account of this size is well known as a "Mega BackDoor Roth". It's a complicated process so always be sure to coordinate this with a financial professional. If you're looking to make great strides towards building your future, this is an option you shouldn't overlook. It's a great vehicle for financial independence. Note: This is purely educational and should not be considered financial or tax advice. Consult with a professional on your situation before implementing this.

When I started my first full-time job at 22.5, I had NO idea what to do with the 401K plan that came with my analyst role at Accenture. 👴 I emailed my uncle, a stock broker, and asked him what to do. When he responded, I blindly followed his advice without knowing the difference between a "small cap US" and an "international growth" fund. In honor of #national401Kday, here are some things I wish I had known about my 401K at 22 and 28. 💸 The default in your 401K is a great investment. Most 401Ks default to Target Date Funds. These are diversified funds that invest in a basket of stocks and bonds. As you get older, these funds shift from more stocks (and more risk) to less stocks and less risk. The Vanguard 2050 Target Date Fund, a fund appropriate for someone in their mid-30s, is up over 8% since last year. You don't need a stock broker Uncle to build wealth in a 401K. 🚫 Getting your 401K match is NOT the same as maxing out. You can contribute $22,500 / year to a 401K. If you make $100K and have a 6% match, getting your full match means contributing $6K. That means you can contribute another $14.5K to retirement accounts and there are tax perks to contributing! 💵 Most 401Ks come in two flavors: Roth and Pre-Tax. Roth lets you pay taxes TODAY and pay NO taxes on the growth and earnings. Pre-tax puts more money in your pocket today since it reduces your tax bill. If you're a high earner or live in NYC / SF (high taxes), pre-tax is a great option. If you're early career and know you will make much more in the future, Roth often makes sense. ⬇️ What do you wish you had known about 401Ks at 22? Help other new grads with freshly minted degrees but little financial education. #401K #investing #money

Young people often ask me, "how much should I put into my 401k?". A few points 1.) 401k contributions lower your taxes (for every $100 you put into a 401k your paycheck is reduced, not by $100, rather by $90-$95 based on your effective tax rate). 2.) The average employer contribution in 2024 was 4.6% of gross salary - always contribute at least up to the employer match. 3.) As your salary increases, save a higher percentage of your pay up to the maximum contribution, which is $23,500 in 2025. (Get a 3% raise, add 1% to your 401k contribution, keep 2% for yourself). 4.) Until you have saved >$200,000 or are within 10-years of retirement, put all your 401k contributions into a S&P 500 index fund (almost all plans offer this as an option). *Assuming a 5% employer match and an 8% return on your investments, you can expect to save the following over 30 years. Please share with your young adult children and young staff!