401k Plan Advantages
401k plans offer many opportunities to their contributors no matter whether they are regular employees or self employed. Next follow several reasons why you should not put off your participation in such a retirement plan.
- Saving facilitation
You make monthly contributions from your salary. As a result you save each month a particular amount which goes directly to your 401k account.
- Contribution amount is up to you.
The IRS sets certain limits to the amount you can contribute. It is up to you to decide how much you are willing and able to contribute to your 401k account, but without exceeding the established limits.
- Easy investing
The accumulated money in your 401k account is invested in mutual funds which meet certain risk levels and which have been pre-selected by either you or your employer. Investing in mutual funds greatly increase your chances of higher profits.
- Employer 401k contribution matching
Some employers provide a 100% matching, which is a dollar-to-dollar matching. Though most employers match only 50% of the contributions of their employees, this is still an instant 50% growth guaranteed.
However, some employers set limits to the proportion of the employees' contribution that they will match. This means that even if you contribute 10% of your salary, your employer may match only a certain percentage.
- Tax advantages of 401k plans
Only after you withdraw money from your retirement plan account you are liable to taxes on your retirement plan earnings. Since at the time you decide to withdraw your money (probably retirement age) you will be at a lower tax bracket, you will greatly save from taxes.
Furthermore, the contributions you make are before any tax deductions. This means that by making as larger contributions as possible you may fall in a lower tax bracket.
The money you have in your 401k plan can be rolled over to your new employer in case you quit your current job. Take advantage of this opportunity in order to save from taxes.
Hopefully, we have managed to persuade you that 401k plan is a very reasonable investment. These are only a few of the reasons to choose a 401k plan investment. For more information on the topic visit the other articles available on our website.
|Rate this article : Low||High|
- Solo 401k Plan or Individual 401k Plan
- Mutual Funds by American Association of Retired Persons (AARP)
- Get the Most out of 401k Matching
- Minimize Company Stock in the 401k
- 401k Contribution Limits Explained
- Retirement Plans and Mutual Funds
- David Wray’s 401k Profit Sharing Plan Opinion
- 401k Investing Advice
- Roth 401k
- Roth 401k New Regulations
- What is a 401k Retirement Plan
- Pension and Social Securities Trends
- Planning for Retirement
- Parent Retirement Assistance
- IRS Income Tax Audit Guidelines
- Retirement Budgeting Planning
- 401k Plan Employer Advices
- IRA Basics
- What is a Traditional IRA Account
- What is a Roth IRA Account
- Spousal IRA
- What is a Rollover IRA
- Education IRA and IRAs for Children Opportunities
- Medicare Health Insurance Explanation
- Advanced Directives as Part of Your Retirement Plan
- Top Don’ts in Retirement Planning
- Motives to Use Personal Financial Budgeting
- Financial Checkup Steps
- How to Make a Budget
- Non Profit Consumer Credit Counseling Agency Advices
- Personal Financial Goals Planning
- Effects of Changing Jobs on 401 (k) Plans
- Reasons to Offer a 401 (k) Plan
- 401k Plan Advices for Employers
- 401k Retirement Plan Fundamentals
- What is a 401k Plan
- Stretch IRA Basics
- Emergency Fund Calculations
- Planning a Budget
- 401k Home Loan
- How to Create and Write a Financial Plan
- Personal Financial Planning
- Specifics of the IRC 401 (c) Section
- Solo 401k Plan
- Individual 401k Plan
- Individual 401k Plans Improvements
- Financial Advice for the Upcoming Year
- Personal Financial Planning Advice
- Benefits of 401k Plans
- Maximize Contributions to 401k to Benefit Employer Matching
- Eliminate High Interest Rate Credit Card Debt
- Open Roth IRA Account
- Home Investment - When and Should I Buy a House?
- Emergency Fund Importance
- Life Cycle Mutual Funds
- Successful 401k Plan Considerations
- Retirement Assets Allocation
- SEP IRA Plan
- IRS 401k Contribution Limits for 2009, 2008 - 2004
- Traditional IRA and Roth IRA Contribution Limits for 2009, 2008 - 2002
- Simple IRA Contribution Limits for 2009, 2008 - 2003
- 403(b) Contribution Limits for 2009, 2008 - 2005
- SEP IRA Contribution Limits for 2009, 2008 - 2004
- Section 457 Plan Contribution Limits for 2009, 2008 - 2005
- Roth IRA Phase-Out Rules Regarding Contribution Limits