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401K Retirement Savings Acount

401K Retirement Savings Acount. BY: DREW HONDA Period 7. What is a 401Retirement Savings Account? :.

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401K Retirement Savings Acount

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  1. 401K Retirement Savings Acount BY: DREW HONDA Period 7

  2. What is a 401Retirement Savings Account? : • A 401k is a company/employer sponsored retirement plan that allows workers to take out a portion of money from their daily paychecks, store it on a retirement plan account and earn interest tax-deferred. • Tax-deferred: The money you have saved is not taxable until you withdraw it 65 years or older.

  3. Knowing Your Penalties: • 401ks are designed to help you save for retirement, there are penalties for taking your money out early. • You’ll owe income taxes on the total amount and, if you're younger than 59½, also may owe a 10% early-withdrawal penalty. • The IRS requires your employer to withhold 20% of your account value to pre-pay at least part of the taxes you’ll owe.

  4. TIPS: • Make good choices. • Its you who chooses how much money you will invest in it. • Talk to a professional for the best investment strategy to help you reach your retirement goals.

  5. 7 Ways To Mess Up: • NOT signing up! • Missing out on the full company match. • Taking too little risk. • Taking too much risk. • Drinking the company “Kool Aid”. • Taking out loans. • Cashing out.

  6. BENEFITS: • An employee's taxable salary is reduced. • All investments in a 401k account grow tax-free until they are withdrawn at retirement. • The employee can re-direct funds among various investment vehicles. • Employer contribution matching can help for retirement savings. A 401k plan can be rolled over into another eligible plan should the employee leave the company. • f an individual files for bankruptcy, the assets in a 401k account are completely protected.

  7. Bibliography: http://www.401kplanning.org/top-401k-planning-questions-and-answers/what-is-a-401k-plan/what-are-average-retirement-savings-for-different-age-groups/ http://articles.moneycentral.msn.com/RetirementandWills/InvestForRetirement/7MostCommon401kBlunders.aspx

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