Advantages to a 401k Plan
- The employee decides how much money to enter into the plan, which makes the employee responsible for his or her own future.
- Any earnings in your 401(k) account grow tax deferred. Since earnings are not taxed until they are withdrawn there are more real dollars working in your investments.
- A typical 401(k) plan provides the employee with a number of different investment options, allowing them to be as conservative or as radical with their savings as they want.
- Employees have the ability to "roll over" their savings if they decide to leave their current employer for a new job, so none of their savings is lost.
- Employers may provide "matching funds," meaning the employer puts in a percentage of what you have already added to your 401(k) plan.
- Automatic payroll deductions make saving for retirement easy. You are less likely to miss money you never see.
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