retirement decisions

As you near the end of your working career and look forward to your retirement years, your dad was right if he said that the retirement decisions you make now will affect the rest of your life. Although it is never too late to start saving, it’s important to have a retirement plan in place as soon as you can start it — the earlier the better. Sometimes even small changes can have a major impact on your retirement savings.

Take advantage of a 401(k) match. Contribute as much as you can to take advantage of matching contributions. Every dollar that an employer matches adds to your bottom line when it comes time for retirement, and it can help your retirement account grow significantly over time.

Resist the urge to withdraw your contributions early. According to the IRS, any payments you receive before you reach age 59 ½ are generally considered early or premature distributions and are subject to an additional 10 percent tax. Even taking out a withdraw once can make a difference as you would need to take out close to a third more to cover the taxes and penalties needed to meet your required amount to withdraw.  

Rollover your 401 (k) sooner than later.
Once you receive the funds from your 401k, you’ve got 60 days to roll them over to another qualified plan. If you don’t, the money will be treated as ordinary income by the IRS. That means you’ll get taxed for the entire amount, and if you’re under the age of 59 1/2, you’ll also face a 10% penalty.

One more point to ponder: Once you hit 50, the rules for contribution limits change slightly. In addition to the regular contribution limits, you are allowed a “catch-up” contribution. That means each year you may make an additional contribution of up to $6,000 into your 401(k), and you may make contributions of up to, but not exceeding, $18,000 (current 2016 limits). If you can add to retirement even at this later date, it will mean you’ll have more savings to live off of when it is time to retire.

Make sure you discuss your long-term plans with your financial advisor. If you do not have one, Mooney Lyons can help. Visit us at or call us at 1.847.382.2600. We can analyze the needs you have now and anticipate those you’ll need in the future.


Tax Help for Senior Citizens. Tax Help. 2016

Early Distribution from Retirement Plans May Have a Tax Impact. 21, IRS. February 2012.

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