 |
||
|
|
The 401(k) retirement plan is funded by employee contribution and a matching employer contribution. The major feature of the plan is that the contributions are taken from pre-taxed salary. The fund accumulates tax-free until it is withdrawn. Most businesses and tax-exempt organizations can create these retirement plans.
The 401(k) takes its name from the IRC (Internal Revenue Code) of 1978. The operation of the 401(k) is administered by the EBSA (Employee Benefits Security Administration) of the Department of Labor.
The 401(k) plan has a lot of advantages. First and foremost is that the employee can contribute pre-tax money that reduces the tax paid in each paycheck. Also, the company contribution and any growth in the fund is free of tax until withdrawn.
The compounding of the fund during a 20 to 30 year period is quite amazing. The employee has a lot of control in the direction of the future contributions. When the company matches your contributions, it adds something extra on top of your own money. All money in the plan can be moved from one company to another unlike pension.
The 401(k) plan is protected by pension laws since it is a personal investment plan. It includes protection from garnishment by creditors but not from domestic cases that include child support.
There are some disadvantages in the 401(k) plan, it is hard to get your 401(k) contributions before age 60 (59 1/2 to be exact). The 401(k) is not insured by the PBGC (Pension Benefit Guaranty Corp). Also, the company contributions do not kick in until a certain number of years of service have been given. The rules state that company matching contributions must either be a 3 year ‘cliff’ plan (100 percent after 3 years) or a 6-year ‘graded’ plan.
Employees participating in a 401(k) plan have many options for investment. In most cases a listing of mutual funds. The mutual funds usually include money market fund, treasuries, stock funds and bond funds. Some plans may include investing in company stock and US Savings Bonds. The employee gets to choose how the savings is invested. The employee can also choose at any time to stop contributions.
Financial advisers usually say that the average 401(k) contributor is non-aggressive in terms of their investment options. Stocks have historically outperformed other types of investment, since the 401(k) is a long term investment it should be able to minimize the stock fluctuations.
Do you want MORE out of life? We believe that YOU deserve the best! The best health. The most happiness. And unlimited prosperity too. It’s all possible when you help yourself using our FREE early retirement planning resources and free self help books. You will be amazed at what only a few minutes on our site will do for you. Feel better NOW! We’re waiting for you at http://personal-enterprise-self-help-resources.com
Article reprint requirements:
Back to Prosperity self help books retirement planning Home page
============================================== The self help books & early retirement tips contents are solely the opinion of the author and should not be considered as a form of therapy, advice, direction and/or diagnosis or treatment of any kind: medical, spiritual, mental or other. If expert advice or counseling is needed, services of a competent professional should be sought. The author and the Publisher assume no responsibility or liability and specifically disclaim any warranty, express or implied for any products or services mentioned, or any self help techniques or practices described. The purchaser or reader of this publication assumes responsibility for the use of these self help books & early retirement tips and information. Neither the author nor the Publisher assumes any responsibility or liability whatsoever on the behalf of any purchaser or reader of these self help materials. The self help books & retirement planning articles early retirement tips for retirement benefit and retirement calculator for required retirement investment for better retirement savings tip on why retire. Self Help articles on business planning and retirement budgets for your retirement finance management self help books & small business resources for business entrepreneurs prosperity and financial resources listed for your convenient self help search in the self help subjects of how to save money, budget tips, sales skills for getting customers for business Prosperity, self help books & small business resources for business entrepreneurs self help prosperity through financial management, self help budgets, self help to save money, self help books & small business resources for business entrepreneurs self help to start a small business, self help career development strategies, self help strategies for increasing your prosperity. The self help books & retirement planning articles early retirement tips for retirement benefit and retirement calculator for required retirement investment for better retirement savings tip on why retire. Self Help articles on business planning and retirement budgets for your retirement finance management Back to Prosperity self help early retirement planning Home page
|
|
The self help books & retirement planning articles early retirement tips for retirement benefit and retirement calculator for required retirement investment for better retirement savings tip on why retire. Self Help articles on business planning and retirement budgets for your retirement finance management.size=1>
The self help books & retirement planning articles early retirement tips for retirement benefit and retirement calculator for required retirement investment for better retirement savings tip on why retire. Self Help articles on business planning and retirement budgets for your retirement finance management.size=1>
