401(k) Plan and my family.
What Does 401(k) Plan Mean?
A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.
Investopedia explains 401(k) Plan
Caps placed by the plan and/or IRS regulations usually limit the percentage of salary deferral contributions. There are also restrictions on how and when employees can withdraw these assets, and penalties may apply if the amount is withdrawn while an employee is under the retirement age as defined by the plan. Plans that allow participants to direct their own investments provide a core group of investment products from which participants may choose. Otherwise, professionals hired by the employer direct and manage the employees' investments.
A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.
Investopedia explains 401(k) Plan
Caps placed by the plan and/or IRS regulations usually limit the percentage of salary deferral contributions. There are also restrictions on how and when employees can withdraw these assets, and penalties may apply if the amount is withdrawn while an employee is under the retirement age as defined by the plan. Plans that allow participants to direct their own investments provide a core group of investment products from which participants may choose. Otherwise, professionals hired by the employer direct and manage the employees' investments.
Replies to This Discussion
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Permalink Reply by Ella on -
Since most people are aware that everyone is making less money than they used to and Social Security isn't a reliable option, what to do about retirement funds? Well, lately a lot of people are thinking of financing 401(k) contributions, or to other retirement funds, or to start an account for college funds for the kids? Well, it's a tough call. The kids can always get financial aid, or scholarships, (or jobs) and your retirement account is absolutely essential. That said, both ideas are noble enterprises, but it can sure be a real quandary – whether to use personal loans to contribute to retirement funds, or college funds for the kids.
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