EquiFi

Did you just leave a job and get a check from your old 401(k) — for less money than your balance showed? That missing 20% is mandatory federal withholding, and getting it back into your IRA is on you. Rolling a 401(k) into an IRA is one of the most common moves after a job change. Done the right way, it costs nothing in tax. Done the wrong way, a $30,000 balance quietly turns into a $6,000 tax problem — plus a penalty if you are under 59½. This guide covers the trap, the safe route, and two mistakes most rollover guides never mention. The $6,000 Trap: What Happens When the Check Comes to You If the plan pays you directly, the IRS requires 20% withholding — even if you plan to roll every dollar over. This is called an indirect rollover. Your plan sends the distribution to you instead of to your IRA, and the law forces the plan to hold back 20% of the taxable amount for federal income tax before you see a cent. On a $30,000 balance, that is $6,000 withheld and a $24,000 check in you...

You are moving abroad, and your 401(k) is staying behind. What happens to it now? Nothing happens to it automatically — but the tax rules change completely once you become a nonresident alien for U.S. tax purposes. A cash-out that cost 20% in withholding as a resident can cost 30% as a nonresident, plus a 10% penalty if you are under 59½. Whether you are a U.S. citizen moving overseas or a visa holder going home for good, this guide works through the four options, the 30% rule, and the traps most guides skip — with real dollar numbers on a $30,000 balance. First, the Question That Changes Every Answer: Are You Still a U.S. Taxpayer? Leaving the country and leaving the U.S. tax system are two different things. Your 401(k) follows your tax status, not your address. U.S. citizens are taxed on worldwide income wherever they live. If you are a citizen moving to London or Singapore, the IRS still treats you as a U.S. taxpayer: your 401(k) works exactly as it did before, and the 30% non...

You just quit your job, and your 401(k) is still sitting with your old employer. What happens to it now? Nothing happens to it automatically — your money stays invested, but you now have four choices, and the wrong one can cost you 30% or more of your balance. Your own contributions are always 100% yours. The employer match depends on vesting. And the rules that decide what you keep — a $7,000 balance threshold, a 20% withholding trap, and a deadline on any outstanding loan — are the parts most guides skip. This guide works through each one with real dollar numbers, using a $30,000 balance as the running example. What You Actually Own When You Leave Every dollar you contributed from your own paycheck is yours, no matter when you leave. The employer match is the part that may not be. Employer contributions vest — become permanently yours — on a schedule your plan sets. Federal law caps how slow that schedule can be, and plans can only be faster, never slower. The two legal maximums...

You got the full employer match. Now you have another $500 a month to save, and two Roth accounts are waiting for it. Which one deserves the next dollar? After the match, the Roth IRA usually takes the next dollar. Both accounts use the same Roth tax deal: you pay tax now, and qualified withdrawals in retirement are tax-free. The difference is not the tax treatment. It is the limits, the fees, and what happens when you need the money early. This guide works through each one with 2026 numbers, and ends with a decision rule you can run in two minutes. Same Tax Deal, Different Accounts Put the same $7,500 a year into either Roth account and the tax result is identical. At a hypothetical 7% a year, $7,500 a year grows to about $762,000 in 30 years — in a Roth 401(k) or a Roth IRA. The 7% is an assumption for illustration, not a prediction; actual returns vary and can be negative. So the question is never which Roth account grows faster. It is which one lets you put more in, charges ...

Your job offers a 401(k) but no employer match, and you have $500 a month to save for retirement. Where does the first dollar go? Without a match, the Roth IRA usually goes first — until you save more than $7,500 a year. With a match, the order is settled: take the free money first. Our guide to retirement accounts covers that order, and it still holds — a match is the closest thing to a guaranteed return in investing. Without one, the two accounts compete on four things: how much room each one gives you, when you pay tax, what the funds cost, and how easily you can reach the money. This guide works through each one with 2026 numbers, and ends with a five-question decision rule. The Capacity Gap: $7,500 vs $24,500 The Roth IRA holds $7,500 a year in 2026. The 401(k) holds $24,500 — more than three times as much. That gap decides the order for most people before tax brackets or fund fees enter the picture. Save $500 a month — $6,000 a year — and the Roth IRA can hold every dolla...

Your first job hands you a 401(k) enrollment form, and someone online tells you to open a Roth IRA instead. Which one do you pick? Take the 401(k) match first, then open a Roth IRA — the order matters more than the account. Retirement accounts all do the same basic job: they shelter your investments from taxes while the money grows. What differs is when you pay the tax, how much you can put in, and who offers the account. This guide explains each type in plain language, with the 2026 limits verified from the IRS, and ends with the funding order most beginners use. The One Idea Behind Every Retirement Account Every retirement account is the same deal in different wrapping: a tax break now or later, in exchange for leaving the money alone until retirement. There are two families. Tax-deferred accounts — a traditional 401(k) and a traditional IRA — give you the tax break today: contributions come out of your pay before income tax, the money grows without yearly tax bills, and you pa...

How much will an index fund actually earn? About 10% a year before inflation, about 7% after it — and almost never 10% in any single year. That one sentence is the honest answer to the question behind this article. The rest of it is about why the average misleads, what the number looks like in dollars, and what return is sensible to plan with. The headline number: 10% a year, with dividends From 1928 through 2025, the S&P 500 compounded at 10.02% a year with dividends reinvested — 6.78% after inflation. Those are the figures from Professor Aswath Damodaran's historical dataset at NYU's Stern School of Business, the standard free source for long-run U.S. market returns. They are total returns: price gains plus every dividend, reinvested. Dividends do most of the quiet work. Hartford Funds calculates that reinvested dividends supplied about 85% of the S&P 500's cumulative total return since 1960. Any return figure that leaves dividends out — like the price-only ...