If your company is offering a 401K Plan, it would be a good idea to find out more about it to see if it suits your needs, or to give you an idea on how to manage it properly.
A 401k Plan is a kind of retirement plan offered by many companies. It allows employees to make contributions out of their salaries to the plan, often for as much as 15% or their salaries annually, or $15,000 whichever is lower (as of 2006). Many employers also make contributions to the individual employees' plans. As of 2006, the maximum amount that can go into an individual's 401K Plan is $44,000 or 100% of your annual salary, again depending on which is lower. The balance of your 401K Plan can be withdrawn without penalty between the ages of 59 and 70 years.
Investing in a 401K Plan has certain advantages than in investing through other means. Foremost is that your contributions to the Plan is withheld before your taxes are computed. Consequently, the portion of your salary that gets taxed is decreased.
Another advantage is that most employers also contribute to individual employees' 401K Plans. Employers also gain from these plans in several ways. First, many use it as incentive for their employees by offering company stock option benefits as part of the plan. Hence, 401K plans become a tool to encourage employees to exert more effort in helping the company make more profit. Another reason why employers contribute to individual 401K Plans is that they also have a financial stake on these plans.
You are also given the option on where and how your 401k funds should be invested, and will have a choice in the mix of investments you can put your money in. You have the right to be informed of the available choices so you can make your decision wisely.
When you leave your present company and move to another one, you have the right to alternative rollover actions for your 401K money.
A 401k Plan is a kind of retirement plan offered by many companies. It allows employees to make contributions out of their salaries to the plan, often for as much as 15% or their salaries annually, or $15,000 whichever is lower (as of 2006). Many employers also make contributions to the individual employees' plans. As of 2006, the maximum amount that can go into an individual's 401K Plan is $44,000 or 100% of your annual salary, again depending on which is lower. The balance of your 401K Plan can be withdrawn without penalty between the ages of 59 and 70 years.
Investing in a 401K Plan has certain advantages than in investing through other means. Foremost is that your contributions to the Plan is withheld before your taxes are computed. Consequently, the portion of your salary that gets taxed is decreased.
Another advantage is that most employers also contribute to individual employees' 401K Plans. Employers also gain from these plans in several ways. First, many use it as incentive for their employees by offering company stock option benefits as part of the plan. Hence, 401K plans become a tool to encourage employees to exert more effort in helping the company make more profit. Another reason why employers contribute to individual 401K Plans is that they also have a financial stake on these plans.
You are also given the option on where and how your 401k funds should be invested, and will have a choice in the mix of investments you can put your money in. You have the right to be informed of the available choices so you can make your decision wisely.
When you leave your present company and move to another one, you have the right to alternative rollover actions for your 401K money.
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