Why 401 Is Important

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I have never met anyone who said I don’t want to have more money, or I don't need any money for my future. Every person has a desire to be financially successful. Any financial advisor will always emphasize the importance of saving money. Any person that has been financially successful without being a celebrity is mainly due to saving money. When saving money the person should let their money work for them. Most people do that by putting their money in a savings account that draws interest while it's in the account. When a person is trying to start an account they should consider a couple of things. First they need to know if there are any monthly fees and minimum deposits. If they're trying to build their money, there isn't a reason why the …show more content…

It is recommended that the individual knows the advantages of the account before starting it. The 401(k) plan is one of the number one ways to accumulate retirement money. Any person who takes out a 401(k) account is taking a great deal and opportunity. With this account many employers will match a portion of your savings. If an individual makes $45,000 and contributes 5 percent to the plan with the $2,250 they contribute, they would receive an additional $1,125 in matching employer contributions. Although every employer does not offer matching contributions, the tax advantages of a 401(k) still make this one of the best ways to save money for retirement. The plan will also allow for tax-deferred earnings, when an individual contribute a percentage of their pay to a 401(k) plan, they immediately start paying less to Uncle Sam. This happens because your contribution comes out of your paycheck before income taxes are deducted. Now instead of a person paying uncle sam all of their money. They lower their taxes and invest in their account (401(k) …show more content…

That is time the person should withdraw the money from your savings account. Although just because a person decides to retire doesn’t mean they have to withdraw their money from their account. There are a few options that the person has to choose from. According to CNN Money, “leave your money parked in the plan; take a lump-sum distribution; roll the money into an IRA; take periodic distributions.” For those who have money outside their 401(k) or 403 (b) plan, it is safe to leave the money parked until you decide you want to use it. Then their are some who retire and buy a beach house or go travel the world, these individual would want to take a lump-sum of their money out. Those who have an IRA (individual retirement account) can have the 401(k) or 403 (b) plan rolled over into their IRA and combined the two account, then withdraw periodically (401(k)s:

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