Great review of why everyone should be taking advantage of their 401k plan at work.l
If you’re employer has a 401(k) plan and you’re not contributing, it’s time to take a serious look at the financial benefits these plans offer. Company sponsored 401(k) plans allow us to deposit a limited amount of pretax income (taken from our gross pay before taxes are withheld) to an account that grows tax-deferred. This lowers our gross income for tax purposes and then later in life when we withdraw the money, it’s taxed as though it were regular income.
But a greater benefit is the immediate return on investment from the company matching provision of most plans. According to a recent Aon Hewitt study, the most common company match is now 100% of an employee’s contribution, up to 6% of the worker’s salary.
With a 100% matching provision, if I contribute $50.00 to my 401(k) through payroll deduction, it immediately becomes a one-hundred dollar deposit due to the company…
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