Quick Read Taxable account gains face 15% capital gains tax. IRA withdrawals are taxed at 22% ordinary income rates on the full amount. Spending taxable accounts first shrinks the IRA before RMDs start at 73. This prevents IRMAA surcharges and higher tax brackets. Heirs inherit taxable accounts with stepped-up basis and pay no capital gains tax. IRA beneficiaries pay ordinary income tax on withdrawals. A recent study identified one single habit that doubled Americans’ retirement savings and moved r ...

Core Insights - Regular contributions to a 401(k) are essential for a comfortable retirement, providing tax advantages and a steady income stream during retirement [1][3] Group 1: 401(k) Contributions - A 401(k) is a retirement savings account offered by employers, allowing employees to contribute a portion of their income before taxes [3] - Contributions to a 401(k) are tax-deferred, meaning taxes are paid upon withdrawal in retirement, potentially resulting in a lower overall tax burden [4] - Employers may offer matching contributions, effectively providing free money that can grow over time [5] Group 2: Contribution Limits and Changes - As of 2025, individuals under 50 can contribute up to $23,500 annually, with those aged 50 and older allowed an additional $7,500 catch-up contribution, increasing to $11,250 for ages 60 to 63 [6] - The Secure 2.0 Act introduces changes affecting employees aged 50 and older earning $145,000 or more, requiring them to contribute catch-up funds to a Roth 401(k) instead of a traditional 401(k) [7][8] - Roth 401(k) contributions are taxed immediately, allowing for tax-free growth and withdrawals in retirement [8]