MAXIMIZING 401(K) CONTRIBUTIONS:
- Not contributing enough to a 401(k) to receive the maximum employer matching contribution can result in money loss.
- An additional strategy involves "front-loading" contributions at the beginning of the year to maximize compound earnings, with the annual contribution limit noted as $22,500 (or $30,000 for those aged 50 or older).
- Caution is advised to maintain contributions throughout the year to secure the employer match effectively.
UTILIZING ROTH IRAS:
- In cases where employers do not offer 401(k) plans, establishing a Roth IRA is recommended to prevent money loss due to compound earnings over time.
- Roth IRAs provide tax-free retirement income and are advantageous when anticipating higher future tax rates.
- Key benefits include exemption from required minimum distributions and tax-free withdrawals for heirs.
Optimizing Flexible Spending Accounts (FSAs):
- Employees should consider taking full advantage of FSAs offered by their employers to avoid money loss.
- FSAs come in two versions: medical expense and dependent care, catering to various qualified expenses.
- Customization of contributions based on expected expenses is encouraged to leverage tax savings.
- Both types of FSAs must be set up through an employer, and separate enrollment is required.
OPTIMIZING TAX WITHHOLDING
- Overwithholding taxes from paychecks, leading to significant tax refunds, is discouraged.
- Host advises using online tax withholding calculators to align tax withholdings with actual tax liability.
- These three strategies are presented as ways to avoid losing money, encouraging listeners to take advantage of them for financial improvement and good stewardship.
On today’s program, Rob also answers listener questions:
- Linda, inherited her parents' home and wants to buy a ranch with first-floor laundry, wondering if she should use her savings to pay the 20% down payment or finance it.
- Kay, is considering moving her $400,000 investments, which include an annuity, and is comparing firms, one offering a load fund with a 4.5% or 5% load fee and another with a 1% annual fee, seeking advice on the better option.
- Caller 3 is concerned about an insurance policy that her 89-year-old mother has, which is decreasing in value and considering canceling it but wants to ensure it's ethically acceptable.
Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network as well as American Family Radio. Visit our website at FaithFi.comwhere you can join the FaithFi Community, and give as we expand our outreach.
Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards of God’s resources.
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