What is a 401(k)?
A 401(k) is a defined contribution plan offered by a corporation to its employees, which allows employees to set aside tax-deferred income for retirement purposes, and in some cases employers will match their contribution dollar-for-dollar. Taking a distribution of the funds before a certain specified age will trigger a penalty tax. The name 401(k) comes from the IRS section describing the program.
How many of you invest in your company's 401(k) plan? Investing in your future is very important especially in this day and age where we may not be able to rely on the benefits of social security by the time we reach the age of 65, the average age for retiring. If you don't invest in your 401(k) or IRA plan now you may not be able to retire later and who wants to work until they're 80? Not me!
I started investing in my company's 401(k) plan in 2002 with as little as $20 a pay period, it doesn't have to be $20, it can be $10 or even $5. The good thing is the company matches your dollar amount so when I contributed $20 so did the company making the total contribution $40.00. That's how it works. I gradually increased the dollar amount over a few years and last year I decided to contribute a percentage. Each company is different but in the Federal Government you can contribute up to 14% each pay period and your agency will match it! That's a great benefit and an excellent investment.
To find out more information on the Thrift Savings Plan log onto www.tsp.gov and begin investing in your future today!
Posts
