You hit a lot of milestone birthdays when you’re young. There’s your first birthday, of course, and also the one where you turn 10 (finally, double digits!). At 13, you’re a teenager. At 16, you’re probably thinking about driving. At 18, you can vote; at 21, you can get into bars.
You hit a bunch of milestones later in life as well, and many of them have to do with retirement . Knowing these age milestones can help you better prepare for life after work. They include:
It’s catch-up time! People 50 and older can contribute $6,500 more to their 401(k)s or 403(b)s each year, for a total contribution of up to $26,000 this year. Those 50 and older who contribute to IRAs and Roth IRAs can throw in an additional $1,000, for a total maximum annual contribution of $7,000.
Normally people have to pay a 10% federal penalty, along with income taxes, when they withdraw money from retirement accounts before age 59 ½. The penalty (but not the taxes) disappears on 401(k) and 403(b) withdrawals if you’re 55 or older when you quit, get fired or retire. This “separated from service “ rule applies during or after the year you turn 55.
TURNING 59 ½
At this age you can take withdrawals from workplace plans or IRAs without penalty. Also, some 401(k) plans allow workers who are at least 59 ½ to do an “in-service “ rollover, allowing you to move money into an IRA while still working and contributing to the 401(k). If you’re interested, check with your 401(k) plan provider or your human resources department to see if this option is available to you.