🕷️ Crawler Inspector

URL Lookup

Direct Parameter Lookup

Raw Queries and Responses

1. Shard Calculation

Query:

Response:

Calculated Shard: 185 (from laksa104)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa185.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.schwab.com/learn/story/how-do-401ks-work-frequently-asked-questions\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.schwab.com/learn/story/how-do-401ks-work-frequently-asked-questions\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.schwab.com\/learn\/story\/how-do-401ks-work-frequently-asked-questions","crawl_time":1776644471,"first_indexed_time":1709151494,"http_code":200,"src_unparsed":"com,schwab!www,\/learn\/story\/how-do-401ks-work-frequently-asked-questions s443","src_root_hash":"12386545145768976185","history_drop_reason":null,"meta_title":"What is a 401(k) and How Does It Work? | Charles Schwab","meta_descriptions":["What is a 401(k)? How does a 401(k) work? Learn how these retirement plans work and get answers to questions on contribution limits, distributions, and more."],"attrs_boilerpipe_text":"If you're like most Americans, when you think ''retirement planning,'' you first turn to the 401(k) plan offered by your employer. After all, it's the most common type of retirement plan out there. However, 401(k) plans can be complex, and it's not always easy to understand exactly how these retirement savings plans work.\nAhead, we'll answer important questions about 401(k) plans, including:\nWhat's the difference between a traditional 401(k) and a Roth 401(k)?\nHow does employer matching work?\nHow much should I contribute to my 401(k)?\nAnd more\nWhat is a 401(k) and how does it work?\nA\n401(k)\nis an employer-sponsored retirement plan that comes with tax benefits. Basically, you put money into the 401(k) where it can be invested and potentially grow tax free over time. In most cases, you choose how much money you want to contribute to your 401(k) based on a percentage of your income. Your employer will then automatically withhold a portion of each paycheck and puts it into the account, making it easy to regularly contribute to your account.\nWant more ways to save for retirement?\nWhat's the difference between a traditional 401(k) and a Roth 401(k)?\nWith a\ntraditional tax-deferred 401(k)\n, the money is taken out of your paycheck before federal income taxes are figured, providing you the chance to reduce your taxes today. You pay ordinary income taxes on the pre-tax contributions and growth when you make a withdrawal in retirement. Note: You must be older than 59 1\/2 (age 55 if you separate from your current employer) to avoid penalties on withdrawals.\nMost employers now offer a\nRoth 401(k)\n, also known as a designated Roth account. Contributions to Roth accounts are made with after-tax dollars, which means you don't get a tax deduction. Instead, your money can potentially grow tax free and be withdrawn in retirement without any taxes. Note: To avoid penalties and\/or taxes on withdrawals, you must hold the account for at least five years and be older than 59 1\/2 (age 55 if you separate from your current employer).\nHow are 401(k) funds invested?\nGenerally, you can choose from a range of investments to fit your risk tolerance and time to retirement. Each 401(k) plan tends to offer different investment options, including mutual funds, exchange-traded funds (ETFs), target-date funds, index funds, money market funds, and individual stocks and bonds. You may also have the option to choose your own investments or have your account managed for you.\nHow does employer matching work?\nIf your employer offers a match, it means they'll put money into your retirement account based on the amount you put in. How the matching works will depend on the specifics of your employer's plan. For example, an employer could offer a dollar-for-dollar match up to a certain dollar limit. Or, an employer match can be based on a percentage of the contribution you make and a percentage of your wages.\nFor example, let's say you earn $6,000 per month, and your employer matches 50% of your contributions up to 6% of your wages. If you wanted to get the full employer match, you'd need to contribute at least $360 per month (6% of your monthly wages) to your account, and your employer would kick in an additional $180 (50% of $360) to match your contribution. As a result, your retirement account would see a combined contribution of $540 per month.\nHere's another scenario to illustrate how employer matching works.\nEmployer match\nEmployee's salary\nWhat employee puts in (6%)\nWhat employer puts in\nTotal contributions for the year\n50%, up to 6% of employee's salary\n$72,000\n$4,320\/yr\n$2,160\/yr\n$6,480\/yr\nIn this example, your employer's matching contributions gave you an additional $2,160 as you saved toward your retirement goal.\nWhat is 401(k) vesting?\nOne of the most important things to understand is how 401(k) vesting works.\nVesting\nis a term that describes how much of the money in your account is actually yours if you were to leave the company or take a distribution.\nEmployee contributions are immediately vested and considered yours. However, most companies, matching or other employer contributions aren't considered yours until you've remained with the company for a set period of time. So, if the company has a vesting schedule, you might not be able to keep all the money your employer invests on your behalf until after you've stayed at the company for the required time period. Check with your plan administrator for the vesting requirements in your particular 401(k) plan.\nWhat are the contribution limits for 401(k) plans?\nYour maximum contribution to a 401(k) depends on the annual limits set by the IRS. The IRS looks at inflation to determine the annual contribution limits. For 2025, the employee elective deferral limit is $23,500. For those 50 or older, the IRS allows\n'catch-up'\ncontributions of up to $7,500, for a total contribution of $31,000 starting in 2025. In addition, those age 60 to 63 are now able to make a catch-up contribution of $11,250 for a total elective deferral of $34,750. Note: Your employer's contributions do not count towards your annual elective deferral limit.\nWith a 401(k), you need to make your contributions during the calendar year. So, if you want time to boost your retirement account and benefit from the special tax treatment, you need to get that extra money into your account before yearend.\nIt's a good idea to review the contributions you set up on your account annually to ensure you're putting away as much as possible.\nHow much should I contribute to my 401(k)?\nHow much you should contribute to your 401(k) depends on your retirement goals and how much you hope to accumulate in your nest egg by the time you retire. While you don't have to contribute the maximum allowed by the IRS, it's worth noting that the more you invest now, the greater the head start you'll likely have toward a comfortable retirement.\nThe longer you wait to save, the more you'll need to save annually for retirement. Every situation will vary, but here are age-based guidelines on how much you should save based on when you start saving for retirement:\nIf you start in your\n20s\n, save 10% - 15% of your salary, including employee match, per year for retirement.\nIf you start in your 30s, save 15% - 20% of your salary, including employee match, per year for retirement.\nIf you start in your early 40s, save 25% to 35% of your salary, including employee match, per year for retirement.\nIf you start later, save as much as possible, and consider other strategies, such as retiring later, to manage retirement.\nIf you have more questions, be sure to ask a tax professional or financial advisor for more information about savings strategies for your 401(k).\nShould I max out my 401(k)?\nOne of the best ways to help achieve your retirement goals is to maximize your 401(k) contributions.\nMaximizing your contributions, meaning you contribute up to the annual IRS contribution limits, allows your investments to potentially benefit from tax-free\ncompound growth\n. The sooner you put compounding to work for you, the better. If you're not able to max out your 401(k), consider increasing your contribution (over the employer match) as often as you can. If you get a raise or bonus, consider using this additional money to help fund your retirement goals.\n401(k) contributions are, of course, only one part of creating a solid financial foundation. To learn more about how to prioritize your savings and retirement goals, check out these\neight savings fundamentals\n.\nWhat do I do with my 401(k) if I change jobs?\nThere are several ways to handle a 401(k) when leaving a job, including leaving your money in the old 401(k), rolling it into your new employer's 401(k) plan, rolling it into an individual retirement account (IRA), or converting it to a Roth IRA. You can also cash out, but if you are younger than 59½, cashing out triggers early withdrawal penalties, 20% federal tax withholding, and potentially state taxes, as well.\n(Learn more in our guide to 401(k) rollovers)\n.\nWhat happens if I make a 401(k) early withdrawal?\nGenerally, if you take money from your 401(k) account before you reach age 59 ½, you'll have to pay taxes on the pre-tax contributions and any growth, plus pay a 10% penalty. But there are some exceptions to the early withdrawal penalty.\nOne exception is known as the\nRule of 55\n. Under this rule, if you lose or leave your job at age 55 or older and take distributions from the 401(k) associated with your most recent job, you won't have to pay the 10% penalty. Other circumstances that might allow you to avoid the 10% penalty include:\nCertain qualified birth or adoption expenses\nA series of substantially equal payments\nPermanent disability\nYou may need to provide documentation to avoid penalty in these cases, so make sure you're prepared to do so. To learn more about the exemptions to the 10% penalty, see the\nIRS website\n.\nCan I contribute to an IRA and 401(k)?\nYes, it's possible to contribute to both\nan IRA and a 401(k)\n. However, if you're eligible to contribute to a 401(k), then your IRA tax deduction may be limited, but your IRA contribution will not. Whether you actually contribute to the 401(k) is irrelevant—merely being eligible for a 401(k) means you'll have to review your modified adjusted gross income to determine if your IRA contribution is eligible for a tax deduction. But the IRA contributions you make won't affect your 401(k) contributions. Check out IRS\nPublication 590-A\nfor an explanation of the IRA deduction rules.\nWhat are required minimum distributions?\nIn general, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking required minimum distributions (RMDs) from all tax-deferred retirement accounts, including 401(k)s. Generally speaking, you can calculate your RMDs for a given year by taking your 401(k) account balance on December 31st of the prior year and dividing it by your \"distribution period\"—a number the IRS assigns to each age.\nFor example, let's say you're 75, single, and ended last year with $1 million in your 401(k). According to the\nIRS\n, your distribution period is 24.6—which means your RMD for the year would be $40,650 ($1,000,000 ÷ 24.6).\nIf you have multiple tax-deferred retirement accounts, RMDs must be calculated separately for each one. Many financial institutions, including Schwab, will help calculate your RMDs for you—and may even offer automated withdrawals—but typically only for the accounts held at their firms. (Learn more in our comprehensive\nguide to RMDs\n).\nWant more ways to save for retirement?\nMore from Charles Schwab\nInvestors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.\nThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.\nAll expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.\nExamples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.\nInvesting involves risk, including loss of principal.\nMoney market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the fund.\nFixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.\nThe information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.\nRoth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1\/2 are subject to an early withdrawal penalty.\nSupporting documentation for any claims or statistical information is available upon request.\n0225-YF19","attrs_markdown":"Loading navigation\n\nMenu\n\n[401(k)](https:\/\/www.schwab.com\/learn\/topic\/401k)\n\n# What is a 401(k) and How Does It Work?\nLearn how 401(k) retirement plans work and get answers to questions on contribution limits, distributions, and more.\n\nFebruary 25, 2025•[Hayden Adams](https:\/\/www.schwab.com\/learn\/author\/hayden-adams)\n\n![](https:\/\/educationcontent.schwab.com\/sites\/g\/files\/eyrktu1071\/files\/401k_3x2.jpg?imwidth=3840)\n***\n\nIf you're like most Americans, when you think ''retirement planning,'' you first turn to the 401(k) plan offered by your employer. After all, it's the most common type of retirement plan out there. However, 401(k) plans can be complex, and it's not always easy to understand exactly how these retirement savings plans work.\n\nAhead, we'll answer important questions about 401(k) plans, including:\n\n- What's the difference between a traditional 401(k) and a Roth 401(k)?\n- How does employer matching work?\n- How much should I contribute to my 401(k)?\n- And more\n## What is a 401(k) and how does it work?\nA **401(k)** is an employer-sponsored retirement plan that comes with tax benefits. Basically, you put money into the 401(k) where it can be invested and potentially grow tax free over time. In most cases, you choose how much money you want to contribute to your 401(k) based on a percentage of your income. Your employer will then automatically withhold a portion of each paycheck and puts it into the account, making it easy to regularly contribute to your account.\n***\n## Want more ways to save for retirement?\n[See how an IRA can help](https:\/\/www.schwab.com\/ira)\n***\n## What's the difference between a traditional 401(k) and a Roth 401(k)?\nWith a **traditional tax-deferred 401(k)**, the money is taken out of your paycheck before federal income taxes are figured, providing you the chance to reduce your taxes today. You pay ordinary income taxes on the pre-tax contributions and growth when you make a withdrawal in retirement. Note: You must be older than 59 1\/2 (age 55 if you separate from your current employer) to avoid penalties on withdrawals.\n\nMost employers now offer a [**Roth 401(k)**](https:\/\/www.schwab.com\/learn\/story\/should-you-consider-roth-401k), also known as a designated Roth account. Contributions to Roth accounts are made with after-tax dollars, which means you don't get a tax deduction. Instead, your money can potentially grow tax free and be withdrawn in retirement without any taxes. Note: To avoid penalties and\/or taxes on withdrawals, you must hold the account for at least five years and be older than 59 1\/2 (age 55 if you separate from your current employer).\n## How are 401(k) funds invested?\nGenerally, you can choose from a range of investments to fit your risk tolerance and time to retirement. Each 401(k) plan tends to offer different investment options, including mutual funds, exchange-traded funds (ETFs), target-date funds, index funds, money market funds, and individual stocks and bonds. You may also have the option to choose your own investments or have your account managed for you.\n\n## How does employer matching work?\nIf your employer offers a match, it means they'll put money into your retirement account based on the amount you put in. How the matching works will depend on the specifics of your employer's plan. For example, an employer could offer a dollar-for-dollar match up to a certain dollar limit. Or, an employer match can be based on a percentage of the contribution you make and a percentage of your wages.\n\nFor example, let's say you earn \\$6,000 per month, and your employer matches 50% of your contributions up to 6% of your wages. If you wanted to get the full employer match, you'd need to contribute at least \\$360 per month (6% of your monthly wages) to your account, and your employer would kick in an additional \\$180 (50% of \\$360) to match your contribution. As a result, your retirement account would see a combined contribution of \\$540 per month.\n\nHere's another scenario to illustrate how employer matching works.\n\n| **Employer match** | Employee's salary | What employee puts in (6%) | What employer puts in | Total contributions for the year |\n|---|---|---|---|---|\n| 50%, up to 6% of employee's salary | \\$72,000 | \\$4,320\/yr | \\$2,160\/yr | \\$6,480\/yr |\n\nIn this example, your employer's matching contributions gave you an additional \\$2,160 as you saved toward your retirement goal.\n\n## What is 401(k) vesting?\nOne of the most important things to understand is how 401(k) vesting works. **Vesting** is a term that describes how much of the money in your account is actually yours if you were to leave the company or take a distribution.\n\nEmployee contributions are immediately vested and considered yours. However, most companies, matching or other employer contributions aren't considered yours until you've remained with the company for a set period of time. So, if the company has a vesting schedule, you might not be able to keep all the money your employer invests on your behalf until after you've stayed at the company for the required time period. Check with your plan administrator for the vesting requirements in your particular 401(k) plan.\n## What are the contribution limits for 401(k) plans?\nYour maximum contribution to a 401(k) depends on the annual limits set by the IRS. The IRS looks at inflation to determine the annual contribution limits. For 2025, the employee elective deferral limit is \\$23,500. For those 50 or older, the IRS allows ['catch-up'](https:\/\/www.schwab.com\/learn\/story\/what-to-know-about-catch-up-contributions) contributions of up to \\$7,500, for a total contribution of \\$31,000 starting in 2025. In addition, those age 60 to 63 are now able to make a catch-up contribution of \\$11,250 for a total elective deferral of \\$34,750. Note: Your employer's contributions do not count towards your annual elective deferral limit.\n\nWith a 401(k), you need to make your contributions during the calendar year. So, if you want time to boost your retirement account and benefit from the special tax treatment, you need to get that extra money into your account before yearend.\n\nIt's a good idea to review the contributions you set up on your account annually to ensure you're putting away as much as possible.\n## How much should I contribute to my 401(k)?\nHow much you should contribute to your 401(k) depends on your retirement goals and how much you hope to accumulate in your nest egg by the time you retire. While you don't have to contribute the maximum allowed by the IRS, it's worth noting that the more you invest now, the greater the head start you'll likely have toward a comfortable retirement.\n\nThe longer you wait to save, the more you'll need to save annually for retirement. Every situation will vary, but here are age-based guidelines on how much you should save based on when you start saving for retirement:\n\n- If you start in your [20s](https:\/\/www.schwab.com\/learn\/story\/your-20s-should-you-consider-investing), save 10% - 15% of your salary, including employee match, per year for retirement.\n- If you start in your 30s, save 15% - 20% of your salary, including employee match, per year for retirement.\n- If you start in your early 40s, save 25% to 35% of your salary, including employee match, per year for retirement.\n- If you start later, save as much as possible, and consider other strategies, such as retiring later, to manage retirement.\n\nIf you have more questions, be sure to ask a tax professional or financial advisor for more information about savings strategies for your 401(k).\n## Should I max out my 401(k)?\nOne of the best ways to help achieve your retirement goals is to maximize your 401(k) contributions.\n\nMaximizing your contributions, meaning you contribute up to the annual IRS contribution limits, allows your investments to potentially benefit from tax-free [compound growth](https:\/\/www.schwab.com\/learn\/story\/investing-basics-power-compounding). The sooner you put compounding to work for you, the better. If you're not able to max out your 401(k), consider increasing your contribution (over the employer match) as often as you can. If you get a raise or bonus, consider using this additional money to help fund your retirement goals.\n\n401(k) contributions are, of course, only one part of creating a solid financial foundation. To learn more about how to prioritize your savings and retirement goals, check out these [eight savings fundamentals](https:\/\/www.schwab.com\/learn\/story\/saving-for-multiple-financial-goals).\n## What do I do with my 401(k) if I change jobs?\nThere are several ways to handle a 401(k) when leaving a job, including leaving your money in the old 401(k), rolling it into your new employer's 401(k) plan, rolling it into an individual retirement account (IRA), or converting it to a Roth IRA. You can also cash out, but if you are younger than 59½, cashing out triggers early withdrawal penalties, 20% federal tax withholding, and potentially state taxes, as well. [(Learn more in our guide to 401(k) rollovers)](https:\/\/www.schwab.com\/learn\/story\/changing-jobs-should-you-roll-over-your-401k).\n\n## What happens if I make a 401(k) early withdrawal?\nGenerally, if you take money from your 401(k) account before you reach age 59 ½, you'll have to pay taxes on the pre-tax contributions and any growth, plus pay a 10% penalty. But there are some exceptions to the early withdrawal penalty.\n\nOne exception is known as the [Rule of 55](https:\/\/www.schwab.com\/learn\/story\/retiring-early-5-key-points-about-rule-55). Under this rule, if you lose or leave your job at age 55 or older and take distributions from the 401(k) associated with your most recent job, you won't have to pay the 10% penalty. Other circumstances that might allow you to avoid the 10% penalty include:\n\n- Certain qualified birth or adoption expenses\n- A series of substantially equal payments\n- Permanent disability\n\nYou may need to provide documentation to avoid penalty in these cases, so make sure you're prepared to do so. To learn more about the exemptions to the 10% penalty, see the [IRS website](https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-exceptions-to-tax-on-early-distributions).\n## Can I contribute to an IRA and 401(k)?\nYes, it's possible to contribute to both [an IRA and a 401(k)](https:\/\/www.schwab.com\/learn\/story\/saving-retirement-ira-vs-401k). However, if you're eligible to contribute to a 401(k), then your IRA tax deduction may be limited, but your IRA contribution will not. Whether you actually contribute to the 401(k) is irrelevant—merely being eligible for a 401(k) means you'll have to review your modified adjusted gross income to determine if your IRA contribution is eligible for a tax deduction. But the IRA contributions you make won't affect your 401(k) contributions. Check out IRS [Publication 590-A](https:\/\/www.irs.gov\/forms-pubs\/about-publication-590-a) for an explanation of the IRA deduction rules.\n\n## What are required minimum distributions?\nIn general, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking required minimum distributions (RMDs) from all tax-deferred retirement accounts, including 401(k)s. Generally speaking, you can calculate your RMDs for a given year by taking your 401(k) account balance on December 31st of the prior year and dividing it by your \"distribution period\"—a number the IRS assigns to each age.\n\nFor example, let's say you're 75, single, and ended last year with \\$1 million in your 401(k). According to the [IRS](https:\/\/www.irs.gov\/pub\/irs-pdf\/p590b.pdf), your distribution period is 24.6—which means your RMD for the year would be \\$40,650 (\\$1,000,000 ÷ 24.6).\n\nIf you have multiple tax-deferred retirement accounts, RMDs must be calculated separately for each one. Many financial institutions, including Schwab, will help calculate your RMDs for you—and may even offer automated withdrawals—but typically only for the accounts held at their firms. (Learn more in our comprehensive [guide to RMDs](https:\/\/www.schwab.com\/learn\/story\/required-minimum-distributions-what-you-should-know)).\n***\n## Want more ways to save for retirement?\n[See how an IRA can help](https:\/\/www.schwab.com\/ira)\n***\n## More from Charles Schwab\n[![](https:\/\/educationcontent.schwab.com\/sites\/g\/files\/eyrktu1071\/files\/AdobeStock_499431767_1x1.jpg?imwidth=3840)Roth 401(k) Considerations Article \\| Apr 17, 2026](https:\/\/www.schwab.com\/learn\/story\/should-you-consider-roth-401k)\n\n[![](https:\/\/educationcontent.schwab.com\/sites\/g\/files\/eyrktu1071\/files\/MA_Diversify-Portfolio-1-trueblue_1x1.jpg?imwidth=3840)Target Date Funds' Benefits Article \\| Mar 4, 2026](https:\/\/www.schwab.com\/learn\/story\/target-date-funds-wealth-accumulation-made-simple)\n\n[![Illustration of an investor placing money into a egg full of savings](https:\/\/educationcontent.schwab.com\/sites\/g\/files\/eyrktu1071\/files\/FD_S21E2_1x1.jpeg?imwidth=3840)Why the 401(k) is Crucial to Saving Podcast \\| Mar 2, 2026](https:\/\/www.schwab.com\/learn\/story\/why-is-401k-crucial-to-retirement-saving)\n\n## Explore more topics\n- [Retirement](https:\/\/www.schwab.com\/learn\/topic\/retirement)\n- [401(k)](https:\/\/www.schwab.com\/learn\/topic\/401k)\n\n**Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.**\n\nThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.\n\nAll expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.\n\nExamples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.\n\nInvesting involves risk, including loss of principal.\n\n**Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at \\$1.00 per share, it is possible to lose money by investing in the fund.**\n\nFixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.\n\nThe information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.\n\nRoth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1\/2 are subject to an early withdrawal penalty.\n\nSupporting documentation for any claims or statistical information is available upon request.\n\n0225-YF19\n\nInvestment and Insurance Products Are: Not FDIC Insured • Not Insured by Any Federal Government Agency • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or any of its Affiliates • Subject to Investment Risks, Including Possible Loss of Principal Amount Invested\n\nThe Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co. Inc. ([Member SIPC](http:\/\/www.sipc.org\/)), and its affiliates offer investment services and products. Its banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides deposit and lending services and products.\n\nThis site is designed for U.S. residents. Non-U.S. residents are subject to country-specific restrictions. Learn more about our services for [non-U.S. residents](https:\/\/international.schwab.com\/), [Charles Schwab Hong Kong clients](https:\/\/www.schwab.com.hk\/), [Charles Schwab U.K. clients](https:\/\/www.schwab.co.uk\/).\n\n© 2026 Charles Schwab & Co., Inc. All rights reserved. [Member SIPC](http:\/\/www.sipc.org\/). Unauthorized access is prohibited. 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[See Our \\#1 Rankings](https:\/\/www.schwab.com\/awards)\n  \n  More choices. 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After all, it's the most common type of retirement plan out there. However, 401(k) plans can be complex, and it's not always easy to understand exactly how these retirement savings plans work. Ahead, we'll answer important questions about 401(k) plans, including: What's the difference between a traditional 401(k) and a Roth 401(k)? How does employer matching work? How much should I contribute to my 401(k)? And more\n\nWhat is a 401(k) and how does it work?\n\nA **401(k)** is an employer-sponsored retirement plan that comes with tax benefits. Basically, you put money into the 401(k) where it can be invested and potentially grow tax free over time. In most cases, you choose how much money you want to contribute to your 401(k) based on a percentage of your income. Your employer will then automatically withhold a portion of each paycheck and puts it into the account, making it easy to regularly contribute to your account.\n***\nWant more ways to save for retirement?\n***\nWhat's the difference between a traditional 401(k) and a Roth 401(k)?\n\nWith a **traditional tax-deferred 401(k)**, the money is taken out of your paycheck before federal income taxes are figured, providing you the chance to reduce your taxes today. You pay ordinary income taxes on the pre-tax contributions and growth when you make a withdrawal in retirement. Note: You must be older than 59 1\/2 (age 55 if you separate from your current employer) to avoid penalties on withdrawals. Most employers now offer a [**Roth 401(k)**](https:\/\/www.schwab.com\/learn\/story\/should-you-consider-roth-401k), also known as a designated Roth account. Contributions to Roth accounts are made with after-tax dollars, which means you don't get a tax deduction. Instead, your money can potentially grow tax free and be withdrawn in retirement without any taxes. Note: To avoid penalties and\/or taxes on withdrawals, you must hold the account for at least five years and be older than 59 1\/2 (age 55 if you separate from your current employer).\n\nHow are 401(k) funds invested?\n\nGenerally, you can choose from a range of investments to fit your risk tolerance and time to retirement. Each 401(k) plan tends to offer different investment options, including mutual funds, exchange-traded funds (ETFs), target-date funds, index funds, money market funds, and individual stocks and bonds. You may also have the option to choose your own investments or have your account managed for you.\n\nHow does employer matching work?\n\nIf your employer offers a match, it means they'll put money into your retirement account based on the amount you put in. How the matching works will depend on the specifics of your employer's plan. For example, an employer could offer a dollar-for-dollar match up to a certain dollar limit. Or, an employer match can be based on a percentage of the contribution you make and a percentage of your wages. For example, let's say you earn \\$6,000 per month, and your employer matches 50% of your contributions up to 6% of your wages. If you wanted to get the full employer match, you'd need to contribute at least \\$360 per month (6% of your monthly wages) to your account, and your employer would kick in an additional \\$180 (50% of \\$360) to match your contribution. As a result, your retirement account would see a combined contribution of \\$540 per month. Here's another scenario to illustrate how employer matching works.\n\n| **Employer match** | Employee's salary | What employee puts in (6%) | What employer puts in | Total contributions for the year |\n|---|---|---|---|---|\n| 50%, up to 6% of employee's salary | \\$72,000 | \\$4,320\/yr | \\$2,160\/yr | \\$6,480\/yr |\n\nIn this example, your employer's matching contributions gave you an additional \\$2,160 as you saved toward your retirement goal.\n\nWhat is 401(k) vesting?\n\nOne of the most important things to understand is how 401(k) vesting works. **Vesting** is a term that describes how much of the money in your account is actually yours if you were to leave the company or take a distribution. Employee contributions are immediately vested and considered yours. However, most companies, matching or other employer contributions aren't considered yours until you've remained with the company for a set period of time. So, if the company has a vesting schedule, you might not be able to keep all the money your employer invests on your behalf until after you've stayed at the company for the required time period. Check with your plan administrator for the vesting requirements in your particular 401(k) plan.\n\nWhat are the contribution limits for 401(k) plans?\n\nYour maximum contribution to a 401(k) depends on the annual limits set by the IRS. The IRS looks at inflation to determine the annual contribution limits. For 2025, the employee elective deferral limit is \\$23,500. For those 50 or older, the IRS allows ['catch-up'](https:\/\/www.schwab.com\/learn\/story\/what-to-know-about-catch-up-contributions) contributions of up to \\$7,500, for a total contribution of \\$31,000 starting in 2025. In addition, those age 60 to 63 are now able to make a catch-up contribution of \\$11,250 for a total elective deferral of \\$34,750. Note: Your employer's contributions do not count towards your annual elective deferral limit. With a 401(k), you need to make your contributions during the calendar year. So, if you want time to boost your retirement account and benefit from the special tax treatment, you need to get that extra money into your account before yearend. It's a good idea to review the contributions you set up on your account annually to ensure you're putting away as much as possible.\n\nHow much should I contribute to my 401(k)?\n\nHow much you should contribute to your 401(k) depends on your retirement goals and how much you hope to accumulate in your nest egg by the time you retire. While you don't have to contribute the maximum allowed by the IRS, it's worth noting that the more you invest now, the greater the head start you'll likely have toward a comfortable retirement. The longer you wait to save, the more you'll need to save annually for retirement. Every situation will vary, but here are age-based guidelines on how much you should save based on when you start saving for retirement: If you start in your [20s](https:\/\/www.schwab.com\/learn\/story\/your-20s-should-you-consider-investing), save 10% - 15% of your salary, including employee match, per year for retirement. If you start in your 30s, save 15% - 20% of your salary, including employee match, per year for retirement. If you start in your early 40s, save 25% to 35% of your salary, including employee match, per year for retirement. If you start later, save as much as possible, and consider other strategies, such as retiring later, to manage retirement. If you have more questions, be sure to ask a tax professional or financial advisor for more information about savings strategies for your 401(k).\n\nShould I max out my 401(k)?\n\nOne of the best ways to help achieve your retirement goals is to maximize your 401(k) contributions. Maximizing your contributions, meaning you contribute up to the annual IRS contribution limits, allows your investments to potentially benefit from tax-free [compound growth](https:\/\/www.schwab.com\/learn\/story\/investing-basics-power-compounding). The sooner you put compounding to work for you, the better. If you're not able to max out your 401(k), consider increasing your contribution (over the employer match) as often as you can. If you get a raise or bonus, consider using this additional money to help fund your retirement goals. 401(k) contributions are, of course, only one part of creating a solid financial foundation. To learn more about how to prioritize your savings and retirement goals, check out these [eight savings fundamentals](https:\/\/www.schwab.com\/learn\/story\/saving-for-multiple-financial-goals).\n\nWhat do I do with my 401(k) if I change jobs?\n\nThere are several ways to handle a 401(k) when leaving a job, including leaving your money in the old 401(k), rolling it into your new employer's 401(k) plan, rolling it into an individual retirement account (IRA), or converting it to a Roth IRA. You can also cash out, but if you are younger than 59½, cashing out triggers early withdrawal penalties, 20% federal tax withholding, and potentially state taxes, as well. [(Learn more in our guide to 401(k) rollovers)](https:\/\/www.schwab.com\/learn\/story\/changing-jobs-should-you-roll-over-your-401k).\n\nWhat happens if I make a 401(k) early withdrawal?\n\nGenerally, if you take money from your 401(k) account before you reach age 59 ½, you'll have to pay taxes on the pre-tax contributions and any growth, plus pay a 10% penalty. But there are some exceptions to the early withdrawal penalty. One exception is known as the [Rule of 55](https:\/\/www.schwab.com\/learn\/story\/retiring-early-5-key-points-about-rule-55). Under this rule, if you lose or leave your job at age 55 or older and take distributions from the 401(k) associated with your most recent job, you won't have to pay the 10% penalty. Other circumstances that might allow you to avoid the 10% penalty include: Certain qualified birth or adoption expenses A series of substantially equal payments Permanent disability You may need to provide documentation to avoid penalty in these cases, so make sure you're prepared to do so. To learn more about the exemptions to the 10% penalty, see the [IRS website](https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-exceptions-to-tax-on-early-distributions).\n\nCan I contribute to an IRA and 401(k)?\n\nYes, it's possible to contribute to both [an IRA and a 401(k)](https:\/\/www.schwab.com\/learn\/story\/saving-retirement-ira-vs-401k). However, if you're eligible to contribute to a 401(k), then your IRA tax deduction may be limited, but your IRA contribution will not. Whether you actually contribute to the 401(k) is irrelevant—merely being eligible for a 401(k) means you'll have to review your modified adjusted gross income to determine if your IRA contribution is eligible for a tax deduction. But the IRA contributions you make won't affect your 401(k) contributions. Check out IRS [Publication 590-A](https:\/\/www.irs.gov\/forms-pubs\/about-publication-590-a) for an explanation of the IRA deduction rules.\n\nWhat are required minimum distributions?\n\nIn general, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking required minimum distributions (RMDs) from all tax-deferred retirement accounts, including 401(k)s. Generally speaking, you can calculate your RMDs for a given year by taking your 401(k) account balance on December 31st of the prior year and dividing it by your \"distribution period\"—a number the IRS assigns to each age. For example, let's say you're 75, single, and ended last year with \\$1 million in your 401(k). According to the [IRS](https:\/\/www.irs.gov\/pub\/irs-pdf\/p590b.pdf), your distribution period is 24.6—which means your RMD for the year would be \\$40,650 (\\$1,000,000 ÷ 24.6). If you have multiple tax-deferred retirement accounts, RMDs must be calculated separately for each one. Many financial institutions, including Schwab, will help calculate your RMDs for you—and may even offer automated withdrawals—but typically only for the accounts held at their firms. (Learn more in our comprehensive [guide to RMDs](https:\/\/www.schwab.com\/learn\/story\/required-minimum-distributions-what-you-should-know)).\n***\nWant more ways to save for retirement?\n***\nMore from Charles Schwab\n\n**Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.** The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Investing involves risk, including loss of principal. **Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at \\$1.00 per share, it is possible to lose money by investing in the fund.** Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information. Roth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1\/2 are subject to an early withdrawal penalty. Supporting documentation for any claims or statistical information is available upon request.\n\n0225-YF19","meta_canonical":null}

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URL	https://www.schwab.com/learn/story/how-do-401ks-work-frequently-asked-questions
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Boilerpipe Text	If you're like most Americans, when you think ''retirement planning,'' you first turn to the 401(k) plan offered by your employer. After all, it's the most common type of retirement plan out there. However, 401(k) plans can be complex, and it's not always easy to understand exactly how these retirement savings plans work. Ahead, we'll answer important questions about 401(k) plans, including: What's the difference between a traditional 401(k) and a Roth 401(k)? How does employer matching work? How much should I contribute to my 401(k)? And more What is a 401(k) and how does it work? A 401(k) is an employer-sponsored retirement plan that comes with tax benefits. Basically, you put money into the 401(k) where it can be invested and potentially grow tax free over time. In most cases, you choose how much money you want to contribute to your 401(k) based on a percentage of your income. Your employer will then automatically withhold a portion of each paycheck and puts it into the account, making it easy to regularly contribute to your account. Want more ways to save for retirement? What's the difference between a traditional 401(k) and a Roth 401(k)? With a traditional tax-deferred 401(k) , the money is taken out of your paycheck before federal income taxes are figured, providing you the chance to reduce your taxes today. You pay ordinary income taxes on the pre-tax contributions and growth when you make a withdrawal in retirement. Note: You must be older than 59 1/2 (age 55 if you separate from your current employer) to avoid penalties on withdrawals. Most employers now offer a Roth 401(k) , also known as a designated Roth account. Contributions to Roth accounts are made with after-tax dollars, which means you don't get a tax deduction. Instead, your money can potentially grow tax free and be withdrawn in retirement without any taxes. Note: To avoid penalties and/or taxes on withdrawals, you must hold the account for at least five years and be older than 59 1/2 (age 55 if you separate from your current employer). How are 401(k) funds invested? Generally, you can choose from a range of investments to fit your risk tolerance and time to retirement. Each 401(k) plan tends to offer different investment options, including mutual funds, exchange-traded funds (ETFs), target-date funds, index funds, money market funds, and individual stocks and bonds. You may also have the option to choose your own investments or have your account managed for you. How does employer matching work? If your employer offers a match, it means they'll put money into your retirement account based on the amount you put in. How the matching works will depend on the specifics of your employer's plan. For example, an employer could offer a dollar-for-dollar match up to a certain dollar limit. Or, an employer match can be based on a percentage of the contribution you make and a percentage of your wages. For example, let's say you earn $6,000 per month, and your employer matches 50% of your contributions up to 6% of your wages. If you wanted to get the full employer match, you'd need to contribute at least $360 per month (6% of your monthly wages) to your account, and your employer would kick in an additional $180 (50% of $360) to match your contribution. As a result, your retirement account would see a combined contribution of $540 per month. Here's another scenario to illustrate how employer matching works. Employer match Employee's salary What employee puts in (6%) What employer puts in Total contributions for the year 50%, up to 6% of employee's salary $72,000 $4,320/yr $2,160/yr $6,480/yr In this example, your employer's matching contributions gave you an additional $2,160 as you saved toward your retirement goal. What is 401(k) vesting? One of the most important things to understand is how 401(k) vesting works. Vesting is a term that describes how much of the money in your account is actually yours if you were to leave the company or take a distribution. Employee contributions are immediately vested and considered yours. However, most companies, matching or other employer contributions aren't considered yours until you've remained with the company for a set period of time. So, if the company has a vesting schedule, you might not be able to keep all the money your employer invests on your behalf until after you've stayed at the company for the required time period. Check with your plan administrator for the vesting requirements in your particular 401(k) plan. What are the contribution limits for 401(k) plans? Your maximum contribution to a 401(k) depends on the annual limits set by the IRS. The IRS looks at inflation to determine the annual contribution limits. For 2025, the employee elective deferral limit is $23,500. For those 50 or older, the IRS allows 'catch-up' contributions of up to $7,500, for a total contribution of $31,000 starting in 2025. In addition, those age 60 to 63 are now able to make a catch-up contribution of $11,250 for a total elective deferral of $34,750. Note: Your employer's contributions do not count towards your annual elective deferral limit. With a 401(k), you need to make your contributions during the calendar year. So, if you want time to boost your retirement account and benefit from the special tax treatment, you need to get that extra money into your account before yearend. It's a good idea to review the contributions you set up on your account annually to ensure you're putting away as much as possible. How much should I contribute to my 401(k)? How much you should contribute to your 401(k) depends on your retirement goals and how much you hope to accumulate in your nest egg by the time you retire. While you don't have to contribute the maximum allowed by the IRS, it's worth noting that the more you invest now, the greater the head start you'll likely have toward a comfortable retirement. The longer you wait to save, the more you'll need to save annually for retirement. Every situation will vary, but here are age-based guidelines on how much you should save based on when you start saving for retirement: If you start in your 20s , save 10% - 15% of your salary, including employee match, per year for retirement. If you start in your 30s, save 15% - 20% of your salary, including employee match, per year for retirement. If you start in your early 40s, save 25% to 35% of your salary, including employee match, per year for retirement. If you start later, save as much as possible, and consider other strategies, such as retiring later, to manage retirement. If you have more questions, be sure to ask a tax professional or financial advisor for more information about savings strategies for your 401(k). Should I max out my 401(k)? One of the best ways to help achieve your retirement goals is to maximize your 401(k) contributions. Maximizing your contributions, meaning you contribute up to the annual IRS contribution limits, allows your investments to potentially benefit from tax-free compound growth . The sooner you put compounding to work for you, the better. If you're not able to max out your 401(k), consider increasing your contribution (over the employer match) as often as you can. If you get a raise or bonus, consider using this additional money to help fund your retirement goals. 401(k) contributions are, of course, only one part of creating a solid financial foundation. To learn more about how to prioritize your savings and retirement goals, check out these eight savings fundamentals . What do I do with my 401(k) if I change jobs? There are several ways to handle a 401(k) when leaving a job, including leaving your money in the old 401(k), rolling it into your new employer's 401(k) plan, rolling it into an individual retirement account (IRA), or converting it to a Roth IRA. You can also cash out, but if you are younger than 59½, cashing out triggers early withdrawal penalties, 20% federal tax withholding, and potentially state taxes, as well. (Learn more in our guide to 401(k) rollovers) . What happens if I make a 401(k) early withdrawal? Generally, if you take money from your 401(k) account before you reach age 59 ½, you'll have to pay taxes on the pre-tax contributions and any growth, plus pay a 10% penalty. But there are some exceptions to the early withdrawal penalty. One exception is known as the Rule of 55 . Under this rule, if you lose or leave your job at age 55 or older and take distributions from the 401(k) associated with your most recent job, you won't have to pay the 10% penalty. Other circumstances that might allow you to avoid the 10% penalty include: Certain qualified birth or adoption expenses A series of substantially equal payments Permanent disability You may need to provide documentation to avoid penalty in these cases, so make sure you're prepared to do so. To learn more about the exemptions to the 10% penalty, see the IRS website . Can I contribute to an IRA and 401(k)? Yes, it's possible to contribute to both an IRA and a 401(k) . However, if you're eligible to contribute to a 401(k), then your IRA tax deduction may be limited, but your IRA contribution will not. Whether you actually contribute to the 401(k) is irrelevant—merely being eligible for a 401(k) means you'll have to review your modified adjusted gross income to determine if your IRA contribution is eligible for a tax deduction. But the IRA contributions you make won't affect your 401(k) contributions. Check out IRS Publication 590-A for an explanation of the IRA deduction rules. What are required minimum distributions? In general, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking required minimum distributions (RMDs) from all tax-deferred retirement accounts, including 401(k)s. Generally speaking, you can calculate your RMDs for a given year by taking your 401(k) account balance on December 31st of the prior year and dividing it by your "distribution period"—a number the IRS assigns to each age. For example, let's say you're 75, single, and ended last year with $1 million in your 401(k). According to the IRS , your distribution period is 24.6—which means your RMD for the year would be $40,650 ($1,000,000 ÷ 24.6). If you have multiple tax-deferred retirement accounts, RMDs must be calculated separately for each one. Many financial institutions, including Schwab, will help calculate your RMDs for you—and may even offer automated withdrawals—but typically only for the accounts held at their firms. (Learn more in our comprehensive guide to RMDs ). Want more ways to save for retirement? More from Charles Schwab Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Investing involves risk, including loss of principal. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the fund. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information. Roth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1/2 are subject to an early withdrawal penalty. Supporting documentation for any claims or statistical information is available upon request. 0225-YF19
Markdown	Loading navigation Menu [401(k)](https://www.schwab.com/learn/topic/401k) # What is a 401(k) and How Does It Work? Learn how 401(k) retirement plans work and get answers to questions on contribution limits, distributions, and more. February 25, 2025•[Hayden Adams](https://www.schwab.com/learn/author/hayden-adams) ![](https://educationcontent.schwab.com/sites/g/files/eyrktu1071/files/401k_3x2.jpg?imwidth=3840) * If you're like most Americans, when you think ''retirement planning,'' you first turn to the 401(k) plan offered by your employer. After all, it's the most common type of retirement plan out there. However, 401(k) plans can be complex, and it's not always easy to understand exactly how these retirement savings plans work. Ahead, we'll answer important questions about 401(k) plans, including: - What's the difference between a traditional 401(k) and a Roth 401(k)? - How does employer matching work? - How much should I contribute to my 401(k)? - And more ## What is a 401(k) and how does it work? A 401(k) is an employer-sponsored retirement plan that comes with tax benefits. Basically, you put money into the 401(k) where it can be invested and potentially grow tax free over time. In most cases, you choose how much money you want to contribute to your 401(k) based on a percentage of your income. Your employer will then automatically withhold a portion of each paycheck and puts it into the account, making it easy to regularly contribute to your account. * ## Want more ways to save for retirement? [See how an IRA can help](https://www.schwab.com/ira) * ## What's the difference between a traditional 401(k) and a Roth 401(k)? With a traditional tax-deferred 401(k), the money is taken out of your paycheck before federal income taxes are figured, providing you the chance to reduce your taxes today. You pay ordinary income taxes on the pre-tax contributions and growth when you make a withdrawal in retirement. Note: You must be older than 59 1/2 (age 55 if you separate from your current employer) to avoid penalties on withdrawals. Most employers now offer a [Roth 401(k)](https://www.schwab.com/learn/story/should-you-consider-roth-401k), also known as a designated Roth account. Contributions to Roth accounts are made with after-tax dollars, which means you don't get a tax deduction. Instead, your money can potentially grow tax free and be withdrawn in retirement without any taxes. Note: To avoid penalties and/or taxes on withdrawals, you must hold the account for at least five years and be older than 59 1/2 (age 55 if you separate from your current employer). ## How are 401(k) funds invested? Generally, you can choose from a range of investments to fit your risk tolerance and time to retirement. Each 401(k) plan tends to offer different investment options, including mutual funds, exchange-traded funds (ETFs), target-date funds, index funds, money market funds, and individual stocks and bonds. You may also have the option to choose your own investments or have your account managed for you. ## How does employer matching work? If your employer offers a match, it means they'll put money into your retirement account based on the amount you put in. How the matching works will depend on the specifics of your employer's plan. For example, an employer could offer a dollar-for-dollar match up to a certain dollar limit. Or, an employer match can be based on a percentage of the contribution you make and a percentage of your wages. For example, let's say you earn \$6,000 per month, and your employer matches 50% of your contributions up to 6% of your wages. If you wanted to get the full employer match, you'd need to contribute at least \$360 per month (6% of your monthly wages) to your account, and your employer would kick in an additional \$180 (50% of \$360) to match your contribution. As a result, your retirement account would see a combined contribution of \$540 per month. Here's another scenario to illustrate how employer matching works. \| Employer match \| Employee's salary \| What employee puts in (6%) \| What employer puts in \| Total contributions for the year \| \|---\|---\|---\|---\|---\| \| 50%, up to 6% of employee's salary \| \$72,000 \| \$4,320/yr \| \$2,160/yr \| \$6,480/yr \| In this example, your employer's matching contributions gave you an additional \$2,160 as you saved toward your retirement goal. ## What is 401(k) vesting? One of the most important things to understand is how 401(k) vesting works. Vesting is a term that describes how much of the money in your account is actually yours if you were to leave the company or take a distribution. Employee contributions are immediately vested and considered yours. However, most companies, matching or other employer contributions aren't considered yours until you've remained with the company for a set period of time. So, if the company has a vesting schedule, you might not be able to keep all the money your employer invests on your behalf until after you've stayed at the company for the required time period. Check with your plan administrator for the vesting requirements in your particular 401(k) plan. ## What are the contribution limits for 401(k) plans? Your maximum contribution to a 401(k) depends on the annual limits set by the IRS. The IRS looks at inflation to determine the annual contribution limits. For 2025, the employee elective deferral limit is \$23,500. For those 50 or older, the IRS allows ['catch-up'](https://www.schwab.com/learn/story/what-to-know-about-catch-up-contributions) contributions of up to \$7,500, for a total contribution of \$31,000 starting in 2025. In addition, those age 60 to 63 are now able to make a catch-up contribution of \$11,250 for a total elective deferral of \$34,750. Note: Your employer's contributions do not count towards your annual elective deferral limit. With a 401(k), you need to make your contributions during the calendar year. So, if you want time to boost your retirement account and benefit from the special tax treatment, you need to get that extra money into your account before yearend. It's a good idea to review the contributions you set up on your account annually to ensure you're putting away as much as possible. ## How much should I contribute to my 401(k)? How much you should contribute to your 401(k) depends on your retirement goals and how much you hope to accumulate in your nest egg by the time you retire. While you don't have to contribute the maximum allowed by the IRS, it's worth noting that the more you invest now, the greater the head start you'll likely have toward a comfortable retirement. The longer you wait to save, the more you'll need to save annually for retirement. Every situation will vary, but here are age-based guidelines on how much you should save based on when you start saving for retirement: - If you start in your [20s](https://www.schwab.com/learn/story/your-20s-should-you-consider-investing), save 10% - 15% of your salary, including employee match, per year for retirement. - If you start in your 30s, save 15% - 20% of your salary, including employee match, per year for retirement. - If you start in your early 40s, save 25% to 35% of your salary, including employee match, per year for retirement. - If you start later, save as much as possible, and consider other strategies, such as retiring later, to manage retirement. If you have more questions, be sure to ask a tax professional or financial advisor for more information about savings strategies for your 401(k). ## Should I max out my 401(k)? One of the best ways to help achieve your retirement goals is to maximize your 401(k) contributions. Maximizing your contributions, meaning you contribute up to the annual IRS contribution limits, allows your investments to potentially benefit from tax-free [compound growth](https://www.schwab.com/learn/story/investing-basics-power-compounding). The sooner you put compounding to work for you, the better. If you're not able to max out your 401(k), consider increasing your contribution (over the employer match) as often as you can. If you get a raise or bonus, consider using this additional money to help fund your retirement goals. 401(k) contributions are, of course, only one part of creating a solid financial foundation. To learn more about how to prioritize your savings and retirement goals, check out these [eight savings fundamentals](https://www.schwab.com/learn/story/saving-for-multiple-financial-goals). ## What do I do with my 401(k) if I change jobs? There are several ways to handle a 401(k) when leaving a job, including leaving your money in the old 401(k), rolling it into your new employer's 401(k) plan, rolling it into an individual retirement account (IRA), or converting it to a Roth IRA. You can also cash out, but if you are younger than 59½, cashing out triggers early withdrawal penalties, 20% federal tax withholding, and potentially state taxes, as well. [(Learn more in our guide to 401(k) rollovers)](https://www.schwab.com/learn/story/changing-jobs-should-you-roll-over-your-401k). ## What happens if I make a 401(k) early withdrawal? Generally, if you take money from your 401(k) account before you reach age 59 ½, you'll have to pay taxes on the pre-tax contributions and any growth, plus pay a 10% penalty. But there are some exceptions to the early withdrawal penalty. One exception is known as the [Rule of 55](https://www.schwab.com/learn/story/retiring-early-5-key-points-about-rule-55). Under this rule, if you lose or leave your job at age 55 or older and take distributions from the 401(k) associated with your most recent job, you won't have to pay the 10% penalty. Other circumstances that might allow you to avoid the 10% penalty include: - Certain qualified birth or adoption expenses - A series of substantially equal payments - Permanent disability You may need to provide documentation to avoid penalty in these cases, so make sure you're prepared to do so. To learn more about the exemptions to the 10% penalty, see the [IRS website](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions). ## Can I contribute to an IRA and 401(k)? Yes, it's possible to contribute to both [an IRA and a 401(k)](https://www.schwab.com/learn/story/saving-retirement-ira-vs-401k). However, if you're eligible to contribute to a 401(k), then your IRA tax deduction may be limited, but your IRA contribution will not. Whether you actually contribute to the 401(k) is irrelevant—merely being eligible for a 401(k) means you'll have to review your modified adjusted gross income to determine if your IRA contribution is eligible for a tax deduction. But the IRA contributions you make won't affect your 401(k) contributions. Check out IRS [Publication 590-A](https://www.irs.gov/forms-pubs/about-publication-590-a) for an explanation of the IRA deduction rules. ## What are required minimum distributions? In general, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking required minimum distributions (RMDs) from all tax-deferred retirement accounts, including 401(k)s. Generally speaking, you can calculate your RMDs for a given year by taking your 401(k) account balance on December 31st of the prior year and dividing it by your "distribution period"—a number the IRS assigns to each age. For example, let's say you're 75, single, and ended last year with \$1 million in your 401(k). According to the [IRS](https://www.irs.gov/pub/irs-pdf/p590b.pdf), your distribution period is 24.6—which means your RMD for the year would be \$40,650 (\$1,000,000 ÷ 24.6). If you have multiple tax-deferred retirement accounts, RMDs must be calculated separately for each one. Many financial institutions, including Schwab, will help calculate your RMDs for you—and may even offer automated withdrawals—but typically only for the accounts held at their firms. (Learn more in our comprehensive [guide to RMDs](https://www.schwab.com/learn/story/required-minimum-distributions-what-you-should-know)). * ## Want more ways to save for retirement? [See how an IRA can help](https://www.schwab.com/ira) * ## More from Charles Schwab [![](https://educationcontent.schwab.com/sites/g/files/eyrktu1071/files/AdobeStock_499431767_1x1.jpg?imwidth=3840)Roth 401(k) Considerations Article \\| Apr 17, 2026](https://www.schwab.com/learn/story/should-you-consider-roth-401k) [![](https://educationcontent.schwab.com/sites/g/files/eyrktu1071/files/MA_Diversify-Portfolio-1-trueblue_1x1.jpg?imwidth=3840)Target Date Funds' Benefits Article \\| Mar 4, 2026](https://www.schwab.com/learn/story/target-date-funds-wealth-accumulation-made-simple) [![Illustration of an investor placing money into a egg full of savings](https://educationcontent.schwab.com/sites/g/files/eyrktu1071/files/FD_S21E2_1x1.jpeg?imwidth=3840)Why the 401(k) is Crucial to Saving Podcast \\| Mar 2, 2026](https://www.schwab.com/learn/story/why-is-401k-crucial-to-retirement-saving) ## Explore more topics - [Retirement](https://www.schwab.com/learn/topic/retirement) - [401(k)](https://www.schwab.com/learn/topic/401k) Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Investing involves risk, including loss of principal. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at \$1.00 per share, it is possible to lose money by investing in the fund.** Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information. Roth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1/2 are subject to an early withdrawal penalty. Supporting documentation for any claims or statistical information is available upon request. 0225-YF19 Investment and Insurance Products Are: Not FDIC Insured • Not Insured by Any Federal Government Agency • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or any of its Affiliates • Subject to Investment Risks, Including Possible Loss of Principal Amount Invested The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co. Inc. ([Member SIPC](http://www.sipc.org/)), and its affiliates offer investment services and products. Its banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides deposit and lending services and products. This site is designed for U.S. residents. Non-U.S. residents are subject to country-specific restrictions. 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Readable Markdown	If you're like most Americans, when you think ''retirement planning,'' you first turn to the 401(k) plan offered by your employer. After all, it's the most common type of retirement plan out there. However, 401(k) plans can be complex, and it's not always easy to understand exactly how these retirement savings plans work. Ahead, we'll answer important questions about 401(k) plans, including: What's the difference between a traditional 401(k) and a Roth 401(k)? How does employer matching work? How much should I contribute to my 401(k)? And more What is a 401(k) and how does it work? A 401(k) is an employer-sponsored retirement plan that comes with tax benefits. Basically, you put money into the 401(k) where it can be invested and potentially grow tax free over time. In most cases, you choose how much money you want to contribute to your 401(k) based on a percentage of your income. Your employer will then automatically withhold a portion of each paycheck and puts it into the account, making it easy to regularly contribute to your account. * Want more ways to save for retirement? * What's the difference between a traditional 401(k) and a Roth 401(k)? With a traditional tax-deferred 401(k), the money is taken out of your paycheck before federal income taxes are figured, providing you the chance to reduce your taxes today. You pay ordinary income taxes on the pre-tax contributions and growth when you make a withdrawal in retirement. Note: You must be older than 59 1/2 (age 55 if you separate from your current employer) to avoid penalties on withdrawals. Most employers now offer a [Roth 401(k)](https://www.schwab.com/learn/story/should-you-consider-roth-401k), also known as a designated Roth account. Contributions to Roth accounts are made with after-tax dollars, which means you don't get a tax deduction. Instead, your money can potentially grow tax free and be withdrawn in retirement without any taxes. Note: To avoid penalties and/or taxes on withdrawals, you must hold the account for at least five years and be older than 59 1/2 (age 55 if you separate from your current employer). How are 401(k) funds invested? Generally, you can choose from a range of investments to fit your risk tolerance and time to retirement. Each 401(k) plan tends to offer different investment options, including mutual funds, exchange-traded funds (ETFs), target-date funds, index funds, money market funds, and individual stocks and bonds. You may also have the option to choose your own investments or have your account managed for you. How does employer matching work? If your employer offers a match, it means they'll put money into your retirement account based on the amount you put in. How the matching works will depend on the specifics of your employer's plan. For example, an employer could offer a dollar-for-dollar match up to a certain dollar limit. Or, an employer match can be based on a percentage of the contribution you make and a percentage of your wages. For example, let's say you earn \$6,000 per month, and your employer matches 50% of your contributions up to 6% of your wages. If you wanted to get the full employer match, you'd need to contribute at least \$360 per month (6% of your monthly wages) to your account, and your employer would kick in an additional \$180 (50% of \$360) to match your contribution. As a result, your retirement account would see a combined contribution of \$540 per month. Here's another scenario to illustrate how employer matching works. \| Employer match \| Employee's salary \| What employee puts in (6%) \| What employer puts in \| Total contributions for the year \| \|---\|---\|---\|---\|---\| \| 50%, up to 6% of employee's salary \| \$72,000 \| \$4,320/yr \| \$2,160/yr \| \$6,480/yr \| In this example, your employer's matching contributions gave you an additional \$2,160 as you saved toward your retirement goal. What is 401(k) vesting? One of the most important things to understand is how 401(k) vesting works. Vesting is a term that describes how much of the money in your account is actually yours if you were to leave the company or take a distribution. Employee contributions are immediately vested and considered yours. However, most companies, matching or other employer contributions aren't considered yours until you've remained with the company for a set period of time. So, if the company has a vesting schedule, you might not be able to keep all the money your employer invests on your behalf until after you've stayed at the company for the required time period. Check with your plan administrator for the vesting requirements in your particular 401(k) plan. What are the contribution limits for 401(k) plans? Your maximum contribution to a 401(k) depends on the annual limits set by the IRS. The IRS looks at inflation to determine the annual contribution limits. For 2025, the employee elective deferral limit is \$23,500. For those 50 or older, the IRS allows ['catch-up'](https://www.schwab.com/learn/story/what-to-know-about-catch-up-contributions) contributions of up to \$7,500, for a total contribution of \$31,000 starting in 2025. In addition, those age 60 to 63 are now able to make a catch-up contribution of \$11,250 for a total elective deferral of \$34,750. Note: Your employer's contributions do not count towards your annual elective deferral limit. With a 401(k), you need to make your contributions during the calendar year. So, if you want time to boost your retirement account and benefit from the special tax treatment, you need to get that extra money into your account before yearend. It's a good idea to review the contributions you set up on your account annually to ensure you're putting away as much as possible. How much should I contribute to my 401(k)? How much you should contribute to your 401(k) depends on your retirement goals and how much you hope to accumulate in your nest egg by the time you retire. While you don't have to contribute the maximum allowed by the IRS, it's worth noting that the more you invest now, the greater the head start you'll likely have toward a comfortable retirement. The longer you wait to save, the more you'll need to save annually for retirement. Every situation will vary, but here are age-based guidelines on how much you should save based on when you start saving for retirement: If you start in your [20s](https://www.schwab.com/learn/story/your-20s-should-you-consider-investing), save 10% - 15% of your salary, including employee match, per year for retirement. If you start in your 30s, save 15% - 20% of your salary, including employee match, per year for retirement. If you start in your early 40s, save 25% to 35% of your salary, including employee match, per year for retirement. If you start later, save as much as possible, and consider other strategies, such as retiring later, to manage retirement. If you have more questions, be sure to ask a tax professional or financial advisor for more information about savings strategies for your 401(k). Should I max out my 401(k)? One of the best ways to help achieve your retirement goals is to maximize your 401(k) contributions. Maximizing your contributions, meaning you contribute up to the annual IRS contribution limits, allows your investments to potentially benefit from tax-free [compound growth](https://www.schwab.com/learn/story/investing-basics-power-compounding). The sooner you put compounding to work for you, the better. If you're not able to max out your 401(k), consider increasing your contribution (over the employer match) as often as you can. If you get a raise or bonus, consider using this additional money to help fund your retirement goals. 401(k) contributions are, of course, only one part of creating a solid financial foundation. To learn more about how to prioritize your savings and retirement goals, check out these [eight savings fundamentals](https://www.schwab.com/learn/story/saving-for-multiple-financial-goals). What do I do with my 401(k) if I change jobs? There are several ways to handle a 401(k) when leaving a job, including leaving your money in the old 401(k), rolling it into your new employer's 401(k) plan, rolling it into an individual retirement account (IRA), or converting it to a Roth IRA. You can also cash out, but if you are younger than 59½, cashing out triggers early withdrawal penalties, 20% federal tax withholding, and potentially state taxes, as well. [(Learn more in our guide to 401(k) rollovers)](https://www.schwab.com/learn/story/changing-jobs-should-you-roll-over-your-401k). What happens if I make a 401(k) early withdrawal? Generally, if you take money from your 401(k) account before you reach age 59 ½, you'll have to pay taxes on the pre-tax contributions and any growth, plus pay a 10% penalty. But there are some exceptions to the early withdrawal penalty. One exception is known as the [Rule of 55](https://www.schwab.com/learn/story/retiring-early-5-key-points-about-rule-55). Under this rule, if you lose or leave your job at age 55 or older and take distributions from the 401(k) associated with your most recent job, you won't have to pay the 10% penalty. Other circumstances that might allow you to avoid the 10% penalty include: Certain qualified birth or adoption expenses A series of substantially equal payments Permanent disability You may need to provide documentation to avoid penalty in these cases, so make sure you're prepared to do so. To learn more about the exemptions to the 10% penalty, see the [IRS website](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions). Can I contribute to an IRA and 401(k)? Yes, it's possible to contribute to both [an IRA and a 401(k)](https://www.schwab.com/learn/story/saving-retirement-ira-vs-401k). However, if you're eligible to contribute to a 401(k), then your IRA tax deduction may be limited, but your IRA contribution will not. Whether you actually contribute to the 401(k) is irrelevant—merely being eligible for a 401(k) means you'll have to review your modified adjusted gross income to determine if your IRA contribution is eligible for a tax deduction. But the IRA contributions you make won't affect your 401(k) contributions. Check out IRS [Publication 590-A](https://www.irs.gov/forms-pubs/about-publication-590-a) for an explanation of the IRA deduction rules. What are required minimum distributions? In general, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking required minimum distributions (RMDs) from all tax-deferred retirement accounts, including 401(k)s. Generally speaking, you can calculate your RMDs for a given year by taking your 401(k) account balance on December 31st of the prior year and dividing it by your "distribution period"—a number the IRS assigns to each age. For example, let's say you're 75, single, and ended last year with \$1 million in your 401(k). According to the [IRS](https://www.irs.gov/pub/irs-pdf/p590b.pdf), your distribution period is 24.6—which means your RMD for the year would be \$40,650 (\$1,000,000 ÷ 24.6). If you have multiple tax-deferred retirement accounts, RMDs must be calculated separately for each one. Many financial institutions, including Schwab, will help calculate your RMDs for you—and may even offer automated withdrawals—but typically only for the accounts held at their firms. (Learn more in our comprehensive [guide to RMDs](https://www.schwab.com/learn/story/required-minimum-distributions-what-you-should-know)). * Want more ways to save for retirement? * More from Charles Schwab Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Investing involves risk, including loss of principal. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at \$1.00 per share, it is possible to lose money by investing in the fund. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information. Roth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1/2 are subject to an early withdrawal penalty. Supporting documentation for any claims or statistical information is available upon request. 0225-YF19
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