Reported 4 months ago
When it comes to retirement accounts, the 401(k) is a popular choice, but there are drawbacks to consider before maximizing contributions. One downside is the limited investment options within a 401(k) plan, which may not align with individual preferences. Additionally, early withdrawals from a 401(k) often incur penalties and taxes, unlike IRAs that offer more leniency. Required minimum distributions (RMDs) at age 73 can complicate retirement planning with potential tax implications. While 401(k)s have advantages, it's recommended to diversify retirement savings with IRAs and brokerage accounts to offset limitations and enjoy benefits like employer matches and tax-deferred growth.
Source: YAHOO