If you are working and have access to a 401(k) plan from your employer, you may have heard references to a company match on contributions what does this mean it means that your employer is helping you save for retirement by matching the money you contribute, up to a certain amount. (those taking qualified roth 401(k) withdrawals—withdrawals taken after retirement age—won’t be taxed on earnings) you could face a tax penalty early withdrawals from retirement accounts, including 401(k)s, are generally subject to a 10 percent tax penalty on top of regular income taxes, as mentioned above.
5 you have creditor protection your 401(k) plans are creditor-protected by law this is why it can be foolish to use 401(k) money to avoid foreclosure, pay off debt or start a business in the case of future bankruptcy, your 401(k) money is a protected asset don’t touch your 401(k) money except for retirement.
When you start a new job, one of the first decisions you'll likely make is whether to participate in the company's 401(k) plan the earlier you start saving in a 401(k), the better but no matter how old you are, it's never too late to contribute more to your 401(k) and bolster your future retirement security. What should you know about your 401(k) being familiar with how a 401(k) really works is the best way to make sure you understand all your options for your retirement money and to stay clear of transactions that could trigger unnecessary taxes and expensive penalties.
401k third-party administrators (tpa) a third-party administrator is basically an organization that is hired by your employer or the 401k plan sponsor, to run your retirement plans for you. Another really important factoid you should know by heart is the age at which you can begin making penalty-free withdrawals: 59 1/2 with few exceptions (as we'll look at in the very next point), taking a withdrawal from your 401(k) prior to turning 59 1/2 will lead to ordinary income taxes plus a 10% early withdrawal penalty.
Take note that when you have a roth option within a 401(k), the company’s contributions are made on a pretax basis only your contributions can be directed to the roth 4.
This is a summary of all you need to know about 401k plans madailylife home family what you should know about a 401k retirement plan family finance what you should know about a 401k retirement plan october 27, 2016 2161 share on facebook. When you start a new job, your boss and co-workers may encourage you to sign up for the company-sponsored 401k these retirement plans provide you with a fast and easy way to save money for your retirement years however, the many benefits of 401k plans come with a cost and you should understand how.