In addition to a Traditional or Roth IRA (you could have both), many people maintain a 401(k) retirement account through their employer.These retirement funds may offer a large pool of cash to tap during an emergency or for other big-ticket items that have not be adequately saved for, such as college education, buying a home or starting a business.Two situations with pension plans or retirement assets are common: 1) a retired or disabled spouse is already drawing upon them on a monthly or other basis and 2) or they may want to liquidate the account entirely.The latter situation is especially common, in my experience, with plans valued under ,000. I am afraid my husband may liquidate our 401k and IRA's that are in his name.
The Income Tax Perspective From an income tax perspective, you want to create the most tax-efficient income you can from the various resources you have.
They're offered by employers so workers can easily save money for retirement.
One of the best features of these plans is that many employers “match” all or a portion of an employee's contributions by depositing additional funds into their account.
If you're counting on using 401(k) funds to pay for your next vacation or to buy a car, I hate to disappoint you, but it isn't allowed.
You can only take money out of one of these plans when you reach the age of 59½, qualify for a hardship, leave the job, become disabled, or die.Most corporations can set up a 401(k) plan, but a 403(b) is available for certain organizations, such as non-profits, public schools, hospitals, and churches only.