Understanding Early Withdrawal Penalties for 401(k)
Intro
When it comes to planning for retirement, navigating the rules around a 401(k) can sometimes feel like walking through a minefield. A 401(k) can be your best friend when saving up for your golden years. However, if you decide to dip into those funds before reaching retirement age, the consequences can be steep. Understanding the penalties associated with early withdrawals is not just essential; it’s crucial for preserving your future financial security.
In this article, we will explore the ins and outs of early withdrawals, diving deep into the why and the how of penalties, the exceptions that apply, and the broader implications for your financial portfolio. By the end, you should have a clearer picture of what’s at stake and how to make informed decisions regarding your retirement savings.
Definition of Terms
Key investment terms explained
To really understand what’s going on behind the scenes with early withdrawals from a 401(k), let’s first define some key terminology. Here’s a quick rundown of essential terms you might encounter:
- 401(k): A retirement savings plan offered by employers allowing employees to save a portion of their paycheck before taxes are taken out.
- Early Withdrawal Penalty: A fee incurred when funds are taken out of a retirement account before the account holder reaches the age of 59½.
- Qualified Distribution: A withdrawal from a 401(k) that meets specific criteria established by the IRS, typically requiring the account holder to be 59½ or older.
- Hardship Withdrawal: A type of early withdrawal that can be made under specific circumstances, such as medical expenses or purchasing a primary residence.
Financial jargon and their meanings
Understanding the terminology surrounding retirement accounts can make the difference between financial confusion and clarity. Here are a few more terms worth noting:
- Rollover: Transferring funds from one retirement account to another without incurring tax penalties.
- Vesting: The process by which an employee earns the right to their employer's contributions toward their retirement plan.
- Match: Refers to the employer's contribution to the employee’s 401(k), often as a percentage of the employee's contribution.
Importance in Investing
Why understanding terms is crucial
Knowing these terms and understanding the implications of early withdrawals can set you on a smoother path to effective investment strategies. If you're unaware of the penalties, you might end up paying a steep price for taking out what might seem like "just a little bit" of your own money.
How terminology impacts investment decisions
Here’s the thing: every decision matters when managing your retirement portfolio. Misinterpreting a term can lead to erroneous decisions, which could result in unnecessary penalties. Grasping the financial language surrounding 401(k) withdrawals empowers you to make choices that align with your long-term goals.
"Knowledge is power, especially when it comes to your money."
Having a firm grasp of the terms involved will not only aid in withdrawal decisions but will also influence your investment strategy moving forward. We're embarking on a journey to dissect financial consequences and empower you with the knowledge to safeguard your retirement.
Whether you’re contemplating dipping into your 401(k) or just want to understand how to navigate these waters smoothly, let’s get into the meat of the matter. In the next sections, we'll detail the penalties and the exceptions that may allow for a more flexible approach.
Overview of (k) Plans
The landscape of retirement savings is fraught with options, but few are as prevalent or impactful as 401(k) plans. These employer-sponsored retirement savings accounts offer individuals a pathway to secure their financial future. Understanding the intricacies of 401(k) plans is crucial, particularly when contemplating the penalties for early withdrawal.
To put it simply, a 401(k) functions as a vehicle that allows employees to funnel money from their salaries before taxes into a sustainable investment portfolio. This means not only can you save effectively, but you also delay tax obligations on contributions until withdrawal, making the account an attractive option for many.
Definition and Purpose
At its core, a 401(k) is designed to encourage long-term savings. The goal? To provide a nest egg for retirement. Unlike traditional savings accounts, these plans often feature higher limits for contributions and a variety of investment choices, which can include stocks, bonds, and mutual funds. Additionally, employers often match a portion of employee contributions, effectively boosting savings.
Having a clear understanding of 401(k) accounts empowers employees to plan their financial futures. The earlier one starts saving, the better prepared they will be when retirement rolls around, keeping in mind that early withdrawals can lead to notable penalties.
Types of (k) Accounts
There are primarily two flavors of 401(k) accounts: the Traditional 401(k) and the Roth 401(k).
Traditional (k)
A Traditional 401(k) allows contributions to be made with pre-tax dollars. This means that for each dollar you contribute, you are effectively lowering your taxable income for the year. An advantage here is the tax-deferred growth—your investment can potentially grow faster since you don’t pay taxes on the earnings until withdrawals are made in retirement.
However, the key characteristic of a Traditional 401(k) lies in its penalty for early withdrawal. If you pull money out before the age of 59 and a half, you typically face a 10% penalty on top of ordinary income taxes. For many, this can be a critical deterrent, emphasizing the importance of long-term thinking and planning.
Roth (k)
On the other hand, the Roth 401(k) introduces a different twist. Here, contributions are made using after-tax dollars, meaning you pay the taxes upfront. The big draw of this type of account is that withdrawals in retirement, provided they follow certain guidelines, will be tax-free. This can make a significant financial difference down the line, especially for individuals who expect to be in a higher tax bracket during their retirement years.
A unique feature of the Roth 401(k) is that while early withdrawal of contributions is allowed without penalties, any pre-tax earning removed before age 59 and a half will incur both taxes and penalties. This highlights the necessity of understanding the nuances of each type of account as it can greatly affect retirement planning decisions.
Understanding these fundamental differences between the two types of 401(k) accounts lays the groundwork for making informed decisions, particularly concerning withdrawal strategies and the ramifications of pulling out funds prematurely.
Regulations Governing Early Withdrawal
Understanding the regulations that govern the early withdrawal of funds from a 401(k) account is crucial for anyone contemplating accessing their retirement savings before reaching retirement age. These rules are not just arbitrary; they serve a specific purpose aimed at protecting individuals from making hasty financial decisions that could jeopardize their long-term security. Being well-versed in these regulations can save you significant money and headache in the long haul.
Age Restrictions
One key regulation governing early withdrawals from a 401(k) is the age restriction imposed by the IRS. Generally, you must be at least 59½ years old to withdraw money without facing penalties. This age marker is crucial because it ensures that funds remain invested over a longer period, allowing them to grow. If an individual withdraws funds before reaching this age threshold, they face a 10% early withdrawal penalty on top of any standard income tax they owe on the amount withdrawn.
This regulation's significance cannot be overstated. By enforcing these age restrictions, the IRS effectively encourages individuals to think twice before tapping into their retirement savings prematurely. Think of it as a financial speed bump preventing hasty decisions driven by short-term financial woes. People often find themselves in tight spots financially, and the temptation to dip into retirement savings can be strong. Recognizing that quick fixes often come with a long-term cost, these regulations serve to instill a more cautious approach.
IRS Guidelines
The IRS guidelines surrounding early withdrawal from a 401(k) are not only about the age limitation; they set a structured framework for the penalties and processes involved. These guidelines can be found in the IRS Publication 575. According to these guidelines, any distribution taken before age 59½ is generally subject to both income tax and the aforementioned additional 10% penalty.
However, it’s essential to keep in mind that there are exceptions to this rule — and they aren’t just wishful thinking. Certain circumstances can grant individuals the ability to withdraw funds without incurring the penalty. For example, if someone becomes disabled, they may be exempt from the penalty.
To add a layer of complexity, the IRS also requires specific forms to be filled out when taking a distribution, outlining the reason for withdrawal. These guidelines demand that individuals be more intentional with their withdrawals, pushing them to assess their financial situations carefully and potentially consult with a financial advisor before making a move.
"Understanding the IRS guidelines can transform a potential financial mistake into a well-informed decision."
Navigating the labyrinth of early withdrawals can feel daunting, but it’s imperative to have a solid grasp of these regulations. Without this knowledge, individuals risk facing unforeseen penalties and taxes that can easily diminish their retirement savings.
Engaging with these IRS guidelines ensures individuals are not only complying with regulations but also making informed financial decisions that align with their long-term goals. It’s a safeguarding mechanism, a reminder that patience often pays off in the world of finance.
Financial Penalties for Early Withdrawal
When considering your 401(k) options, understanding the ramifications of withdrawing funds early is crucial. Early withdrawal can seem appealing during financial distress, but it comes with a hefty price tag in terms of penalties and taxes. Knowing these penalties allows individuals to navigate their retirement plans more effectively, ensuring they make informed financial decisions without jeopardizing their future security.
Standard Penalty Fees
Withdrawing funds from a 401(k) before reaching the age of 59 and a half typically incurs a standard penalty fee of 10%. This fee exists to discourage early access to retirement savings, which is meant to be a long-term investment vehicle. Let’s break down what that means in real terms:
- If you withdraw $10,000 early, not only do you face the standard penalty fee of $1,000, but you could also be on the hook for taxes on that amount.
- This fee is calculated based on the amount withdrawn and applies to the simple act of taking money out too soon.
It’s key to consider this penalty as a potential roadblock. The initial allure of accessing your money can quickly turn into financial folly once penalties are accounted for.
Tax Implications
Ordinary Income Tax
When you take an early withdrawal from your 401(k), the money is taxed as ordinary income. This means the funds you’ve contributed, along with any earnings, will be added to your taxable income for that year. Here’s why this is important on multiple levels:
- The tax rate applied to your withdrawal will depend on your income bracket for that year. Higher income means higher taxes, which can eat into your earnings substantially.
- If one finds themselves withdrawing a significant amount, they might inadvertently bump themselves into a higher tax bracket, leading to even greater taxation.
A distinguishing feature about ordinary income tax is its uniformity; it treats 401(k) funds just like any other income, making it a predictable yet costly component of early withdrawals.
Additional Tax for Early Withdrawal
Alongside the ordinary income tax, there’s an additional layer: the 10% tax penalty for early withdrawals. This is separate from your income tax obligations and serves as a deterrent against early access. This tax is levied in addition to the regular ordinary income taxes. Here’s what you should grasp:
- The penalty applies solely to retirement accounts like 401(k)s and 403(b)s, emphasizing the government's aim to keep those funds secure until retirement.
- This additional tax hits hard, especially if one withdraws a substantial amount.
A unique characteristic of this additional tax is how it functions independently. Everything you withdraw gets taxed as ordinary income, but this 10% penalty is a double whammy to discourage early withdrawal clearly. This adds to the significant downsides of premature access to retirement funds.
Understanding the layers of penalties and taxes associated with early withdrawal from a 401(k) provides a clearer picture when considering your options. It helps frame the conversation around your financial needs and reinforces the importance of keeping retirement funds intact, even in tight situations.
Exceptions to Early Withdrawal Penalties
Understanding the exceptions to early withdrawal penalties is crucial for anyone considering tapping into their 401(k) funds prematurely. These exemptions can significantly alleviate financial strain during emergencies or major life changes. Knowing what qualifies for a penalty-free withdrawal can help individuals avoid more severe long-term repercussions on their retirement savings. Below are the key scenarios where early withdrawals may not incur the usual fees.
Hardship Withdrawals
Hardship withdrawals are perhaps the most often discussed exception to penalties. To qualify, the IRS stipulates that the funds must be used for an immediate and pressing financial need. This can include expenses like buying a primary home, avoiding eviction, or medical bills. However, it’s important to note that not all plans allow hardship withdrawals. If you are considering this route, ensure your specific 401(k) plan provides such an option.
The amount withdrawn typically cannot exceed the exact need; for instance, if you require funds to avoid foreclosure, you can only withdraw what’s necessary to satisfy that debt. While you may evade the penalty, the money will still be taxable, demonstrating why this option should be approached with caution.
Separation from Service
Another interesting exception occurs if an individual separates from their employer after reaching the age of 55. This can be new employment, retirement, or even layoffs. Essentially, if you're 55 or older when leaving your job, you may withdraw from your 401(k) without facing the typical 10% early withdrawal penalty. This provision recognizes the realities that come with transitioning into new phases of work or life.
It’s crucial, however, that the withdrawal comes from the 401(k) of the employer you have separated from. Funds from previous employers do not qualify for this exception. This can be a handy avenue for those needing immediate financial support following a job change, making it essential to plan accordingly during employment transitions.
Disability Considerations
Disability provides yet another layer of exemption. If you become totally and permanently disabled, you can withdraw from your 401(k) without facing penalties. The IRS defines total and permanent disability rather strictly; it means you cannot engage in any substantial gainful activity due to your physical or mental condition. Proving this status often requires sufficient documentation and sometimes a physician’s confirmation.
For many, this exception can be a lifeline during unexpected medical crises, but it should not be taken lightly. Just as with hardship withdrawals, any money taken out will still need to be reported as taxable income. Thus, evaluating all aspects of your situation remains critical.
Birth or Adoption of a Child
Lastly, there’s a newer exception to consider with regard to the birth or adoption of a child. A new provision allows for penalty-free withdrawals of up to $5,000 per parent from a 401(k) to cover expenses associated with childbirth or adoption. This focuses on providing families some financial relief during monumental life changes.
It’s vital to keep in mind that while this encompasses a reasonable amount of financial assistance, any amount withdrawn is still subject to regular income tax. Hence, those considering this route should think strategically about how it fits into their broader financial picture.
Key Takeaway: Each of these exceptions provides unique pathways, but potential tax implications remain. Careful planning is indeed essential to maximize the benefits of any withdrawal while minimizing the financial impact.
Understanding these exceptions can play a significant role in strategic financial planning. Always make sure to consult with a financial advisor before making decisions, as they can guide you through specific details and requirements related to your unique situation.
Impact of Early Withdrawal on Retirement Savings
Understanding the financial implications of taking money out of a 401(k) before reaching retirement age is crucial for safeguarding one's future. This section explores how early withdrawals can significantly hinder long-term savings and the overall financial fitness of individuals approaching their retirement age.
Long-Term Growth Potential
When individuals withdraw funds from their 401(k) accounts prematurely, they disrupt a carefully orchestrated investment strategy that relies on time to grow wealth. Think of a 401(k) as a seed planted in fertile soil; with time, sunlight, and water, it flourishes into a robust tree. However, when someone uproots this seed too early, they lose out not just on the immediate financial benefit but also the exponential growth potential that would have occurred through compounding returns.
For instance, if you’re 30 years old and withdraw $10,000 from your account, not only are you facing penalties but also losing access to the market's growth. Assuming an average annual return of 7%, after 30 years, that initial amount could potentially grow to over $76,000. This data underscores the critical nature of leaving funds untouched to maximize growth potential.
Compounding Interest Effects
Compounding interest works like snowball rolling down a hill, gaining size at an increasing rate as it rolls. In the realm of retirement accounts, compounded interest builds on both the principal and the accumulated interest from previous periods. The longer the funds remain in the account, the more significant the snowball effect can be—in terms of a 401(k), delaying withdrawals enables the full harnessing of compounding interest.
To elaborate, let's put this into numbers. If one contributes $5,000 a year to a 401(k) for 30 years at that same 7% return, they would end up with over $740,000. However, if they withdraw even a small portion of funds during those years, they risk reducing the compounding effect significantly. The dilemma is stark: weigh immediate needs against the long-term benefits of allowing those funds to work harder for you.
"Time in the market beats timing the market."
This saying aptly captures the essence of retirement investing—by pulling out funds early, investors aren’t just paying today’s price; they are sacrificing future gains.
In short, early withdrawals can create a ripple effect that negatively influences the trajectory of retirement savings, turning what could have been a secure retirement into a tight financial spot. To make informed financial decisions, it’s essential to weigh the necessity of immediate funds against the long-term growth potential and compounding benefits of leaving the money in a 401(k). Soon enough, those decisions shape the entire financial landscape of one’s retirement.
Making Informed Decisions About Withdrawals
Navigating the complexities of early withdrawal from a 401(k) is no small feat. It’s not just a fleeting thought prompted by financial strain; each decision carries long-term implications far beyond immediate relief. Whether life events unfold with unexpected urgency or plans become derailed, understanding the penalties and consequences of these withdrawals is crucial to protecting your financial future.
The process of withdrawing funds from such accounts should be approached with thorough assessment and strategy, as it can easily lead to fiscal missteps. The consequences may seem straightforward at first glance, but examining the nuances can reveal deeper considerations. Grasping your current financial needs alongside evaluating potential alternatives can steer you toward choices that sidestep unnecessary penalties. The decision-making process isn’t just about the withdrawal itself—it’s about planning effectively for your overall financial picture.
Assessing Financial Needs
When contemplating an early withdrawal, one has to seriously reflect on why funds are needed. Is it a mere impulse to indulge in a short-term desire, or is it a pressing financial crisis? Sift through your financial inventory—assess income, debts, and future needs. A dollar withdrawn today may well leave you penny-pinching tomorrow.
Digging into your current situation can uncover key insights:
- Emergency Expenses: Medical bills, repairs on a house, or urgent educational costs require immediate attention.
- Lifestyle Choices: Reducing lifestyle expenses now could help avoid withdrawing retirement funds, which is a heavier price to pay in the long run.
Aside from current needs, consider the impact this withdrawal might have on retirement plans. In short, make a list and scrutinize it. Recognizing whether your reasons are truly urgent can offer a clearer path forward. Acting in haste might bring regret when the financial reality hits later in life.
Alternatives to Early Withdrawal
Exploring alternatives before resorting to an early 401(k) withdrawal can offer new solutions to financial woes. The goal here is to avoid heavy penalties while still accessing funds—so let’s unpack a couple of popular options.
(k) Loans
A key alternative is taking a loan from your 401(k). This option has a distinct appeal because you’re essentially borrowing from your future self, paying interest back to your own account. It’s important to remember, though, that:
- You’ll need to pay it back within five years, or face penalties.
- Interest Rates tend to be lower than other loan options, making it a financially sound move when executed wisely.
The unique aspect of 401(k) loans is that they can be beneficial for short-term needs without the taxation involved in an outright withdrawal. However, if you leave your job before paying the loan back, the outstanding amount is considered a distribution, and you may incur penalties and taxes. Thus, while it can serve well in certain scenarios, caution must be exercised.
Other Savings Options
Another option might be examining any other savings you might have stashed away. High-yield savings accounts or short-term investment accounts can serve as useful resources without the drawbacks tied to early 401(k) withdrawals. Here’s why:
- Accessibility: These funds are typically more accessible without affecting retirement savings directly.
- Less Impact on Retirement: The funds remain intact, thereby preserving that compounding potential for your future.
Consider also other financial products like certificates of deposits (CDs) or money market funds, which offer liquidity while potentially generating interest. However, do recognize that these options may not equate to immediate cash when needed, so weighing the pros and cons is essential before diving in blind.
In perspective: The path taken with your 401(k) should align with your broader financial ambitions—understanding each option’s impact will lay a foundation for more secure decision making.
By grappling with the pros and cons of various alternatives, you’ll arm yourself with knowledge and confidence. Early withdrawals need not be a knee-jerk reaction, but rather a well-calculated decision that safeguards your future financial well-being.
Consulting Financial Advisors
Navigating the complexities of early withdrawal from a 401(k) can feel like trying to find your way through a labyrinth without a map. This is where consulting financial advisors becomes invaluable. Their expertise can illuminate the often unclear paths of financial decision-making.
A financial advisor can provide tailored advice that considers your unique situation. They can clarify the penalties associated with early withdrawal and help you foresee the long-term implications. Choosing to consult with a professional can ultimately save you a lot of heartache and money. Understanding when and how to withdraw funds isn’t just about knowing the fees—it’s about having a strategist on your side, ensuring that you don’t stumble into pitfalls that could derail your retirement plans.
When to Seek Advice
Recognizing when to engage a financial advisor is crucial. Here are a few scenarios that signal it might be time to seek professional guidance:
- Facing a Financial Crisis: If you're caught in a bind and considering an early withdrawal as a solution, talking to an advisor can provide perspective. They may propose alternatives that aren’t immediately apparent.
- Considering Job Changes: A career transition—whether a layoff or moving to a better opportunity—often prompts financial questions. An advisor can help you plan for 401(k) withdrawals in a tax-efficient manner.
- Looking to Retire Early: For those contemplating early retirement, understanding 401(k) implications is vital. An advisor can assist in crafting a withdrawal strategy that aligns with your retirement goals.
- Unsure About Financial Goals: If you’re uncertain about your investments or retirement planning, a financial advisor can clarify your objectives and prepare a roadmap for achieving them.
"Consulting a financial advisor isn't just about avoiding penalties; it's about crafting a future that aligns with your life goals."
How to Choose a Financial Advisor
The choice of a financial advisor should not be taken lightly. Here are several critical considerations:
- Qualifications: Look for credentials like CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst). These ensure that the advisor has undergone rigorous training.
- Experience: A well-rounded advisor with experience in retirement planning can provide insights that a less experienced professional might overlook. Ask about their track record in helping clients with 401(k) plans specifically.
- Fee Structure: Understand how the advisor charges for their services. Some may work on salaries, others on commission, and some utilize a fee-only structure. Ensure the fee arrangement aligns with your preferences and financial situation.
- Personal Fit: This might be somewhat subjective, but an advisor should be someone you feel comfortable discussing your financial issues with. A good rapport can be essential for an open dialogue about your finances.
- Fiduciary Duty: Ensure that the advisor is a fiduciary. This means they are legally bound to act in your best interest, providing you peace of mind when making financial decisions.
A careful selection of a financial advisor can significantly affect your financial future, especially when it comes to the penalties tied to early 401(k) withdrawals.
Examples of Early Withdrawal Scenarios
Understanding the examples of early withdrawal from a 401(k) account can paint a clearer picture for those considering this significant financial step. The decision to tap into retirement savings early isn’t one that should be taken lightly; it speaks volumes about the urgency of one’s circumstances. The repercussions of such a choice can ripple through one’s finances for many years.
By illustrating specific scenarios where early withdrawal may occur, we can better grasp the underlying reasons and the potential financial consequences. Here are two critical case studies that highlight these situations.
Case Study: Financial Emergency
Imagine a person, let’s call her Sarah, who has been steadily contributing to her 401(k) for years. One day, she faces an unexpected financial crisis: her car breaks down, and repairs will cost her $3,000, money she simply doesn’t have on hand. Sarah considers her options, including taking out a personal loan or using her credit card. However, high interest rates on these alternatives make her hesitate.
In a moment of desperation, Sarah decides to withdraw funds from her 401(k). The penalties hit hard; she not only incurs a 10% early withdrawal penalty but also adds the amount to her taxable income for the year, significantly increasing her tax liability. This case underscores the complexity of decisions surrounding 401(k) withdrawals.
Key Considerations:
- Determine if the emergency is unavoidable or if there are other resources.
- Weigh the immediate financial relief against long-term repercussions on retirement savings.
Case Study: Career Transition
Meet Tom, who is in his late 40s and has recently been laid off from his job. Facing an unknown future, he decides to start his own business. To fund his initial startup costs, he considers withdrawing from his 401(k). Though he views this as an investment in his future, he faces similar penalties as Sarah did.
Tom chooses to withdraw $20,000, believing that he can quickly turn a profit. However, by doing so, he has to pay the hefty 10% penalty plus any applicable federal and state taxes. The financial drain from his retirement account could make it harder for him to achieve his long-term goals, adding undue stress to an already challenging transition period.
Key Takeaways:
- Consider all options before making a withdrawal, such as resources from unemployment benefits or loans at lower interest rates.
- Understand that the costs of immediate access to cash can hinder future financial stability.
It's crucial to remember that early withdrawals may provide quick cash relief but can significantly affect future retirement dreams.
In summary, illustrating scenarios such as Sarah’s and Tom’s not only shows the dire situations that can prompt early withdrawals but the implications attached to these choices as well. Each decision to take money out of a 401(k) should be carefully evaluated in the context of personal financial health and retirement objectives.
Culmination
Understanding the implications of early withdrawal from a 401(k) is crucial for anyone navigating their retirement planning. This article sheds light on the penalties and repercussions involved, offering insights into how these financial decisions can significantly affect long-term saving strategies.
The penalties tied to early withdrawals are not just about losing out on funds but also entail broader financial ramifications, including tax implications. The hefty 10% penalty may seem like a minor detail at the outset, but when compounded with ordinary income tax, it can produce a substantial dent in your savings. Knowing these rules equips individuals with the awareness to avoid expensive financial mistakes that could jeopardize their future.
Summary of Key Points
- Penalties: A 10% penalty for withdrawals before age 59½, added to the applicable income tax.
- Exceptions: Certain situations like disability, hardships, or other life events can bypass penalties.
- Impact on Savings: Early withdrawals can severely limit the growth potential of retirement funds, affecting compounding interest benefits.
- Seeking Assistance: Consulting with financial advisors can provide tailored strategies to understand and navigate these pitfalls effectively.
"A stitch in time saves nine"—the importance of grasping early withdrawal penalties cannot be overstated. By being informed, individuals can protect their nest egg from unnecessary detriments.
Final Thoughts on Early Withdrawals
When contemplating an early withdrawal from a 401(k), it’s imperative to weigh the short-term benefits against long-term consequences. Grab a calculator and run the numbers; what seems like an immediate fix could turn into a long-lasting financial headache down the road. Consider other financial avenues, like loans or additional savings, before delving into retirement funds.
