When I walked across the stage to get my diploma, the term 401k meant absolutely nothing to me. I was more concerned about getting a job than how I was going to retire. When I got hired, I was just happy to have a job with a salary. I was fortunate enough to get a great paying job, but also one that came with benefits. One of those benefits was a 401k plan.
If you work with a company who offers a 401k program, you want to make sure you are getting the most out of your retirement plan as you can. You are working hard, and your 401k should be working just as hard. Today, I’m going to show you how to get the most out of your 401k.
Start Contributing
The first step to getting to most out of your 401k is to actually put money into it. This
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DON’T cash out your account, you’ll end up paying for all kinds of taxes and penalties for cashing out your 401k early.
Maximize your tax break
A traditional 401k plan allows you to not pay income tax on the money you save for retirement. Be aware of your contribution limits as these are adjusted each year.
According to the Society for Human Resource Management the defined contribution plan limits for 401k plans are as follows:
Maximum employee elective deferral- 18,000
Employee catch-up contribution (if age 50 or older by year end)- 6,000
Keep Contributing
Don’t just accept the default savings rate. Often this rate can be as low as 3 percent. While 3 percent is better than nothing, for most 3 percent won’t be enough to maintain your current lifestyle when you retire. Fidelity suggests you contribute at least 10%.
Don’t touch your 401k before you retire
You might be tempted to dip into your retirement fund for a major purchase, find the will to resist. You’ll pay extra fees and taxes, and you are robbing your future self. If you leave it alone, your money will continue to grow year after year. Your gains can be reinvested and you’ll earn more than you would have with just a small chunk of
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save is a single dollar that you won’t have to borrow. When borrowing, doing it smart is the only
Both 401(k) and pension plans are qualified plans, this means, the plan is governed by the regulations in the Employee Retirement Income Security Act of 1974 and the tax code. This also means that agency matching is not required even though most so match. Matching is generally done up to a certain percent or under a profit-sharing feature.
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Today is the day to start saving money for retirement. The way people can be more informed with where there money goes, and how it is spent is by merging unnecessary accounts together. This gives a better view of how much is at hand, and the account information is very helpful in knowing how it is used. This method is informative and simply, and can help save a lot. Also, people can pay them selves first. By doing this money is put into a specific account before anything else. This way there is less to spend or waste, and its almost like it was never there to begin with so it is not missed. Along with those options people should sacrifice unneeded luxuries to save money, especially during the warmer months. One article says, “Summertime is notorious for...
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