What is a 401K plan?


By admin ~ October 7th, 2009. Filed under: General.

What is a 401K plan?

I understand that it is a method to save money and put it away for after your retirement, but I actually have no idea what it involves and how it is done and what exactly it is. I don't need to know for any particular reason because I'm still a student but I was just wondering.

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2 Responses to What is a 401K plan?

  1. admin
    October 7th, 2009 at 4:38 pm
    It is a retirement account. Typically it is set up by your employer. The employee puts a certain amount of salary into the account and the employer matches a certain amount of that amount…normally 6%. The contributions are divided up between stocks and other funds. You can lose money, you can make money…depends on how aggressive you go with your portfolio and how well it does.
  2. admin
    October 7th, 2009 at 4:38 pm
    It is a benefit provided by the company you work for. You already defined what it is. Some employers match dollar for dollar of what you put in up to 6% of your salary. Some companies allow you to choose what investment vehicles you want and others just allow investments in the company's stock. The money is not taxable until you start to withdraw it.

    j

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