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| 401k Secrets |
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| Written by Michael Swanson |
| Sunday, 15 November 2009 10:03 |
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From the time we first started working we hear about the benefits of having steady employment and look for 401 advice . One of the best known is the 401k retirement plan. This is a savings account set up by the employer that allows a certain amount of their paycheck to be deposit into the plan, before taxes. This account is set up by investment brokers and the employer to ensure that the employee has adequate residual income for their senior years. The retirement plan insures that when we do retire, we don't have to strive so hard to make ends meet. This account will pay a monthly salary to the person who has saved for many years and has reached the age of retirement. The following is a list of some of the benefits of a 401k retirement plan. 1. Most companies that offer the benefit of a 401k retirement plan will match a certain percentage to deposit into the account and this adds up quickly, leaving the employee even more money without having to pay taxes on it. 2. It allows the employee to make a few tax free investments. The 401k gives the employee the chance at dabbling into the stock market, buying bonds, and even purchasing mutual funds. They can really make the account take off by spreading their investments in many different areas. 3. It can be transferred. 401k retirement plans can easily be transferred from one company to another. It is designed to help save for retirement. The value of the retirement plan remains the same when transferred and the employee can continue to deposit money. Generally, it is against the rules set by the IRS, the government and the agency, if one is used, to draw any of the money out of the account before reaching retirement age. Making a withdrawal can be done under certain circumstances, for reasons such as foreclosure and education. Keep in mind, when a withdrawal is requested, it can have very heavy fines, sometimes as high as 40% of the withdrawal. This fine goes to pay the taxes that should have been paid on it if it went to payroll. This account is set up to help with retirement and if it is used before then, it will be taxed. About the Author: For more articles from Mike Swanson sign up to his stock trading weekly newsletter. Kindly provided by MoneyHunter.org You are welcome to use this article on your own website, if you include the link just before this text. |
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