Former President Donald Trump’s 2024 campaign plans to hold a big fundraising event Saturday featuring major Wall Street figures, with billionaires from other industries also slated to attend.
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Savers who put money into traditional IRAs and 401(k)s get a nice tax break. Contributions up to an annual limit exempt some of your earnings from taxes, so if you fund one of these accounts, you get to not only set money aside for retirement, but pay the IRS a little less.
But because your contributions to a traditional IRA or 401(k) plan go in on a pre-tax basis, the IRS wants you to leave your money alone long enough for it to serve as income for retirement. As such, there’s a 10% early withdrawal penalty that generally applies to distributions from these accounts taken prior to age 59 1/2.
Now there are a few exceptions. IRAs, for example, allow you to withdraw up to $10,000 to purchase a first-time home. You can also tap an IRA early to pay for higher education.
Image source: Getty Images.
But even if you’re able to take an IRA or 401(k) withdrawal without incurring a penalty, doing so prior to actual retirement could hurt you in a very big way. Here’s why.
It’s a matter of lost investment gains
Clearly, a 10% early withdrawal penalty has the potential to cause you financial harm. But even if you’re able to avoid that penalty, raiding your IRA or 401(k) might harm you financially in another way.
The money in your IRA or 401(k) shouldn’t just sit in cash. Ideally, you’re investing that money so your balance grows nicely over time. As such, any dollar you remove from an IRA or 401(k) early is money you can’t keep investing. And the consequences there could be huge.
Let’s say you take a $10,000 withdrawal from your IRA at age 35 to purchase a home. But let’s also assume you then don’t retire until age 70. Furthermore, let’s assume that your IRA portfolio delivers an average annual return of 8%, which is a bit below the stock market’s average.
By missing out on the opportunity to earn 8% on your $10,000 withdrawal over 35 years, you’re losing out on almost $148,000 of retirement income. That could potentially constitute a few years’ worth of bills for your senior self, depending on what your costs turn out to be.
Be careful even when taking a withdrawal after age 59 1/2
Once you turn 59 1/2, you can remove funds from your IRA or 401(k) without having to worry about a penalty. But even then, it’s important to be careful.
Let’s say you’re thinking of removing $20,000 from your 401(k) to renovate your home at age 60. That money is yours free and clear of penalties. But let’s also assume you’re not retiring until age 68, and that your portfolio delivers a yearly return of 6% in your 60s (since, by then, it’s good to shift to more conservative investments).
Losing out on a 6% return on $20,000 over eight years means missing out on about $32,000 in retirement income. That’s still a notable sum. It could, for example, end up being money you need to pay for healthcare down the line.
The fact that the IRS imposes early withdrawal penalties on IRAs and 401(k)s is actually sort of a good thing, since it may be the factor that helps you stay disciplined and avoid tapping your savings prematurely. But even if you’re able to avoid a penalty, it still pays to try not to take a withdrawal from your IRA or 401(k) until you’re actually retired and absolutely need that money.
Several crypto stakeholders have advised Apple, the iPhone maker, to invest in Bitcoin.
In a Feb. 16 post on the social media platform X (formerly Twitter), Shapeshift CEO and founder Erik Voorhees urged the technology company to quietly “buy several billion of BTC” and make the top crypto a payment method in its Apple Pay product.
He said this move would help the company “make a billion dollars instantly” and further drive the top crypto adoption.
Chen Fang, the chief operating officer of BitGo, suggested that integrating BTC into Apple Pay and Apple’s new Vision Pro headset would allow the company to “dominate metaverse payments.”
In 2021, Michael Saylor, the chairman of the largest corporate holder of BTC, MicroStrategy, said:
“If Apple were to add support for Bitcoin to the iPhone and convert their treasury to a Bitcoin Standard, it would be worth at least a trillion dollars to their shareholders.”
Over recent years, institutional enthusiasm for BTC has surged, culminating in the launch of numerous spot exchange-traded funds (ETFs). These ETFs represent a significant milestone, granting access to Bitcoin for a broader array of prominent financial institutions and funds.
Apple’s relationship with Bitcoin
Apple, the second-largest company by market capitalization, has a complex relationship with the emerging crypto sector.
The company previously hosted the Bitcoin whitepaper on its Mac computers for an extended duration. At the same time, Apple’s App Store has stringent policies regarding cryptocurrencies, resulting in the brief removals of various crypto-related applications like MetaMask, Coinbase Wallet, Trust Wallet, Damus, and others.
Despite these challenges, key figures within Apple have expressed positive sentiments towards crypto. Co-founder Steve Wozniak endorsed Bitcoin as a sound investment choice, revealing that he once made significant investments in the digital asset.
Similarly, Apple CEO Tim Cook mentioned his ownership of digital assets in 2021, emphasizing that it reflected his views rather than Apple’s official stance on cryptocurrencies.
Tap Protocol seeks to continue building new Bitcoin applications, ranging from fractionalization of Ordinals art and token functions for gaming applications.
Trac Systems, a German-based company and the parent entity of Tap Protocol, recently announced the completion of a funding round where it pulled the sum of $4.2 million from investors. The funding round was led by Sora Ventures and the capital raised is earmarked for the continued development of the company’s initiatives, particularly in the Bitcoin (BTC) ecosystem.
Trac Systems Funding: Ultimate Goal
Trac Systems has been gaining attention for its innovative approach to blockchain technology, and this recent injection of capital is poised to accelerate its efforts. The blockchain startup’s Tap Protocol focuses on leveraging the capabilities of the Bitcoin blockchain through the Ordinals system.
Interestingly, the $4.2 million fund will be instrumental in fostering innovation and contributing to the broader ecosystem of applications built on the Bitcoin blockchain. As highlighted by the firm, the fund will likely empower Tap Protocol to refine its infrastructure, enhance user experience, and explore novel applications within the Bitcoin ecosystem.
Notably, the company has revealed several applications that have seen the light of day in the Ordinals world through the Tap Protocol. Also, Benny the developer and CEO of Trac Systems, noted that the platform will be utilized for tokenization, gamification, and Decentralized Finance (DeFi).
Meanwhile, the decision to develop BTC is noteworthy, considering the cryptocurrency’s reputation as a secure and decentralized network. While many blockchain projects have emerged on alternative platforms, Trac Systems’ focus on BTC underscores a commitment to the principle of security and decentralization.
Bitcoin’s Utility Extends Beyond a Store of Value
While some criticize Ordinals and NFTs as unnecessary congestion on the BTC network, supporters of the move see them as a way to expand the utility of Bitcoin and showcase its possibilities beyond just storing value. Beyond this, Tap Protocol also seeks to continue building new Bitcoin applications, ranging from fractionalization of Ordinals art and token functions for gaming applications.
Recall that in November, Taproot Wizards secured new funding to further develop the BTC ecosystem. The $7.5 million fundraising led by Standard Crypto will help Taproot Wizards bring together developers to build different applications and solutions on top of the Bitcoin Base layer that will maximize the potential of the Taproot upgrade carried out in 2021.
Additionally, the project aims to foster an ecosystem where Bitcoin developers can freely collaborate to push the boundaries of what is possible on the blockchain. It also focuses on enhancing scalability and privacy for the Bitcoin network using innovations like zero-knowledge (ZK) proofs and layer-roll-ups.
As traditional financial institutions and seasoned investors recognize the transformative potential of blockchain, companies like Trac Systems and Taproot Wizards have become beneficiaries of a favorable funding environment. Also, the funds position Trac Systems and its outfit, Tap Protocol, as key players in the evolving world where more utilities are making their way to Bitcoin.
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The U.S. Environmental Protection Agency is adding some “forever chemicals” to the list of toxins that must be reported by drinking water utilities. That is going to require a lot of infrastructure investment.
“We are now in the process of establishing a drinking water standard for about six different PFAS,” Radhika Fox, assistant administrator for the EPA’s Office of Water, told CNBC. PFAS is an abbreviation for per- and polyfluoroalkyl substances.
Beginning Nov. 30, water quality reports due July 1, 2025, and onward must include information about the levels of PFAS above four parts per trillion in drinking water.
“These per- and polyfluorinated alkyl substances, they’re made by different companies that take fluorine and they attach it to two carbon molecules and they stick around forever. That’s why they got the nickname ‘forever chemicals,'” explained Tom Neltner, senior director of safer chemicals at the Environmental Defense Fund.
PFAS are chemicals that have been released into the environment through textile manufacturing, plating facilities, and aviation manufacturing as well as plastics, resins, molds, and more, according to the Utah Department of Environmental Quality.
Cheryl Norton, chief operating officer for American Water, the largest publicly traded water and wastewater utility company in the country, said meeting this reporting requirement is going to be expensive. “It’s going to cost about $47 billion in infrastructure investments across the U.S. to treat for PFAS at four parts per trillion. And we think that the ongoing costs are going to be about $700 million a year.”
About 300 million people in the U.S. receive their water from a public water system, according to the EPA. At least 45% of tap water in the U.S. is known to have PFAS in it, according to the U.S. Geological Survey.
“We have been monitoring for PFAS for some time, and we see that it’s occurring in drinking water systems at levels of concern,” said Fox.
“Not only is it a carcinogen, but that chemical also undermines our immune system. It undermines the effectiveness of vaccines, which is a big issue,” Neltner said.
Sydney Evans, a senior science analyst at the Environmental Working Group, said, “Most tap water is probably not going to have a system set up at the treatment plant where PFAS is going to be able to be treated. In the future, hopefully, that will happen, but at the moment there’s still PFAS in a lot of people’s water.”
In the meantime, Evans says, some additional filtration for water is needed. Most experts agree that filtering the water at home is a temporary solution to a massive health concern.
“We really believe that the people who are responsible for the contamination should have to pay for this, not our customers,” said Norton. Without additional funding from Congress, the infrastructure upgrades will likely be funded through the rates consumers pay for water usage.
Watch the video above to learn more about how safe tap water is in the U.S.