Secrets To 401k's
You need 401k advice. Years ago almost every employee in every company received a pension through a company paid pension plan. People stayed on one job for their entire career and companies felt it was their duty to provide this type of loyalty after retirement as well. The major benefit of having a pension was that the employee didn't need to contribute. It was a gift. Then life changed and so did corporate America. Companies still were willing to help you after retirement, but they looked for other vehicles to do it. And so came the 401k plan.
This type of retirement plan became very popular very quickly. It was an added benefit companies in that they didn't need to do anything other than select a brokerage house to manage these accounts. Most companies that weren't unionized elected to offer these plans to employees, and many of them even had plans where they would contribute right along with the employee, sometimes doubling the investment. However, this is optional and no company is obligated to contribute on behalf of any employee. Many companies either stopped, never did, or reduced their contributions significantly.
Each person can contribute up to $15, 000 a year without regard to their income level. 401Ks are made up of mutual funds, and the employee can pick and choose which funds he wants to invest in. However, he is limited to funds offered by that brokerage firm managing the plan.
Even though the concept of a 401k is attractive, not all plans are worth the investment. Many employees choose not to participate in their company's plan because after doing some research they may find that the funds (mutual funds) have not performed well.
If you try to withdraw any funds from your account before the age of 59, you will be taxed and then stuck with another penalty from the IRS. You invested with pre-tax dollars, so you're going to pay your taxes at the end.
When the time comes to leave your company, don't forget to take your 401k with you. Get some professional financial advice on rolling it over into another 401k or a Roth IRA. - 23204
This type of retirement plan became very popular very quickly. It was an added benefit companies in that they didn't need to do anything other than select a brokerage house to manage these accounts. Most companies that weren't unionized elected to offer these plans to employees, and many of them even had plans where they would contribute right along with the employee, sometimes doubling the investment. However, this is optional and no company is obligated to contribute on behalf of any employee. Many companies either stopped, never did, or reduced their contributions significantly.
Each person can contribute up to $15, 000 a year without regard to their income level. 401Ks are made up of mutual funds, and the employee can pick and choose which funds he wants to invest in. However, he is limited to funds offered by that brokerage firm managing the plan.
Even though the concept of a 401k is attractive, not all plans are worth the investment. Many employees choose not to participate in their company's plan because after doing some research they may find that the funds (mutual funds) have not performed well.
If you try to withdraw any funds from your account before the age of 59, you will be taxed and then stuck with another penalty from the IRS. You invested with pre-tax dollars, so you're going to pay your taxes at the end.
When the time comes to leave your company, don't forget to take your 401k with you. Get some professional financial advice on rolling it over into another 401k or a Roth IRA. - 23204
posted by X - Men @ 1:57 AM
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