You are probably familiar with the basic concept of a 401(k), in that you put money into it pre-tax every pay period and usually get an employer match. But Arif Halaby from Total Financial Solutions is reminding residents that a 401(k) has quite a few other benefits that you may not know about.

“You do have to realize that it is given a different layer of protection, given a different layer of growth because it’s deferred,” said Halaby, a Certified Estate Planner and president/CEO of Total Financial Solutions.

For instance, you can earn interest on the money that you would have paid in taxes, and the funds in a 401(k) are often exempt from counting against you in certain situations.

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“There’s the fun part,” the financial professional said. “It doesn’t count against you when your kids are trying to get into college (with) the FAFSA form, it doesn’t count against you in the world of countable assets, income tax, even for liabilities.”

The money set aside in a 401(k) may not even affect your ability to file bankruptcy if needed.

“If you look at bankruptcy court and some of the laws, they’re going to say, ‘We can defer some or all of that,’” Halaby explained. “In other words, you can have money there and still file bankruptcy, so it’s kind of an interesting thing.”

Perhaps the most important 401(k) benefit not many people know about is that a special provision often exists which allows you to borrow from it in the case of an emergency.

“Believe it or not, and this matters more than anything, it allows you to borrow from it when you need to — that provision exists,” Arif Halaby said.

Because of constantly new and evolving changes in the “rules” of the financial world, Halaby encouraged a curiosity in learning about your particular 401(k) plan and the potential benefits and options that come along with it from your CPA and employer’s Human Resources representative.

As a way of “taking control” of your financial planning, he advised asking the appropriate professional how much you can put in, can you put money in before tax, should you put money in after tax and do you even need to put money in this particular 401(k).

“You’ve got to think further down the road,” Halaby said, asking what happens when you get older or become injured or ill and unable to work. “That’s what these retirement accounts are for… These are not just, ‘Hey, what am I doing this weekend?’ It’s, ‘How do I set aside money for the just-in-case in the future?’”

Total Financial Solutions offers assistance with preparing for retirement in Santa Clarita and the surrounding valleys. Santa Clarita financial professional Arif Halaby, a Certified Estate Planner, and Total Financial Solutions staff work with people of all ages, helping them protect, grow and preserve their assets through an individualized approach. As a well-known financial professional, Arif Halaby is also the host of “Total Financial Solutions Safer Money Hour” on KHTS AM-1220. Launched in 2004, the show offers listeners retirement planning tips and guidance for dealing with today’s ever-changing financial needs.  

Total Financial Solutions, Inc.

24322 Main Street

Newhall, CA 91321

661-753-9683

800-990-7344

Total Financial Solutions – Newhall

https://www.youtube.com/watch?v=tAeRQxzx3oE

Arif Halaby, Total Financial Solutions, Financial Planning, Planning for Retirement, Retirement Planning