401(k) basics
art by chrysti
How is your nest egg doing?
Wondering what a 401(k) actually is? Need to explain it to your employees? Here’s a quick article that will help you brush up on the basics of 401(k) plans.
What is a 401(k)?
A 401(k) plan is a special type of savings account that is offered only through employers. This account allows you to defer part of your salary today, for future use in retirement. Best of all, you can invest your 401(k) dollars so they can potentially grow. With a 401(k) plan, you are not taxed on the money you contribute until you begin to take it out at retirement. That means fewer taxes today and more savings for you!
What does a 401(k) mean for me?
For some of you, this may be the ONLY method of saving for retirement, for others, it’s a nice complement to other investments.
401(k) plans offer many benefits that apply to everyone:
*Tax savings - You will pay less in taxes as soon as you start contributing. For example, if you are in the 31% tax bracket, for every $1,000 you put into a 401(k) plan you will pay $310 less in current taxes.
*It’s easy - Your employer automatically deducts 401(k) contributions from your paycheck as directed by you.
*Deferred taxes - Your accumulated 401(k) contributions will not be taxed until you begin to withdraw your money.
Remember, your company’s 401(k) plan is one of the easiest ways to start savings for retirement — take advantage of it!
This article comes to you from The Online 401(k), a provider of 401(k)s for small businesses.
For more information or a free consultation on your 401(k) plan, call John Wasiejko at jwasiejko@theonline401k.com or call us at 415.477.8800 ext 828.
