A 401K plan is a retirement savings plan that is funded by employee contributions and a matching contribution from the employer. Contributions are made from pre-tax salary and the funds grow tax-free until they are withdrawn. Companies, non-profit and other tax-exempt organizations can establish these plans for their employees. 401K retirement plans are named after the section of the Internal Revenue Code that prescribes the rules under which it operates.
It is also known as cash or deferred arrangement (CODA) plan.
Under the 401K plans, an employer allows the employee to defer receipt of part of his or her compensation by contributing that part to his or her account. The Employee Benefits Security
Administration of the U.S. Department of Labor regulates 401K plans.
Some 401K plans include a 50% matching contribution from the employer for the employee. Employers may also make contributions to an employee's account independent of the employee's contribution and these contributions may be tied to a firm's profits as part of a profit sharing plan. Some 401K plans offer individuals an opportunity to direct accounts to a variety of investment options like mutual funds, stock market or company stock.
State governments are prohibited from offering 401K plans to their employees. Private, tax-exempt employers however, are eligible to establish a 401K plan for their qualified employees.
There are numerous advantages with 401K plans from the perspective of an employee.
Employees can contribute to their 401K plan with pre-tax money. This reduces the amount of tax paid out of each salary check. All contributions from the employer and any growth of capital are exempted from taxes. The employee can decide where to direct future contributions and savings, giving them control over the investments. All contributions can be moved from one company's plan to the next company's plan if an employee changes jobs. 40 K plans are very popular as a retirement plan because of the double benefit of saving money for retirement as also saving on tax liability. plan.
Retirement Plans provides detailed information on Retirement Plans, 401K Retirement Plans, Small Business Retirement Plans, Retirement Plan Services and more. Retirement Plans is affiliated with Individual Retirement Account Withdrawals
Article Source: http://EzineArticles.com/?expert=Peter_Emerson
Tuesday, March 31, 2009
Tuesday, March 24, 2009
Current Issues and Long Range Retirement Plans
When it comes to your personal retirement plans, you need to keep in mind that there are some issues that you need to watch out for. Current issues may be an issue, and you need to allow for those issues if you are going to have a nest egg when you retire.
Obviously, the current recession is one of those issues. The big problem is that it's making some stocks more volatile than they generally would be normally, and so a lot of stock advisers are essentially clueless when it comes to dealing with the situation. This does not mean that you should not trust any advice given, as most of the advice is still good advice, and is still valid. It does mean that you need to recognize that sometimes the advice you are given may be outdated or worthless, and so you need to learn to trust your gut. After all, your instincts may be looking at something that your conscious mind isn't, and that subconscious voice may be aware of something that you aren't.
A word of warning when it comes to dealing with your gut: Treat it like any other asset, and monitor it like you would any other asset. Not everyone's instincts are completely worthy of trust; if you trust yours regardless of how accurate it is, you may be setting yourself up for failure. At the same time, if yours is usually on the money, then it is something you should trust. If you are constantly being made fun of by your friends because of how often you are wrong, then following your instinct may be a bad idea. Otherwise, it may give you vital information on a current situation.
Otherwise, playing it conservatively may not be a bad idea right now. Although taking reasonable risks may be acceptable, taking too many risks in a volatile situation may eventually work against you, and cost you everything. Just remember to cover your bets, and keep your head down. For now, you need to keep in mind that rapids will eventually end, and you just need to be able to last until then; if you can last until the rapids are in the background, there will be a number of rewards for you, not the least of which is that you kept your money. When the recession is over, you need to be able to reap the rewards, and be ready for a return to interesting times!
Author and entrepreneur Bernz Jayma P. is the owner of a financial blog dedicated to helping people expand their knowledge on personal finance. You may visit his blog at http://www.Invesmint.com
Article Source: http://EzineArticles.com/?expert=Bernz_Jayma_P.
Obviously, the current recession is one of those issues. The big problem is that it's making some stocks more volatile than they generally would be normally, and so a lot of stock advisers are essentially clueless when it comes to dealing with the situation. This does not mean that you should not trust any advice given, as most of the advice is still good advice, and is still valid. It does mean that you need to recognize that sometimes the advice you are given may be outdated or worthless, and so you need to learn to trust your gut. After all, your instincts may be looking at something that your conscious mind isn't, and that subconscious voice may be aware of something that you aren't.
A word of warning when it comes to dealing with your gut: Treat it like any other asset, and monitor it like you would any other asset. Not everyone's instincts are completely worthy of trust; if you trust yours regardless of how accurate it is, you may be setting yourself up for failure. At the same time, if yours is usually on the money, then it is something you should trust. If you are constantly being made fun of by your friends because of how often you are wrong, then following your instinct may be a bad idea. Otherwise, it may give you vital information on a current situation.
Otherwise, playing it conservatively may not be a bad idea right now. Although taking reasonable risks may be acceptable, taking too many risks in a volatile situation may eventually work against you, and cost you everything. Just remember to cover your bets, and keep your head down. For now, you need to keep in mind that rapids will eventually end, and you just need to be able to last until then; if you can last until the rapids are in the background, there will be a number of rewards for you, not the least of which is that you kept your money. When the recession is over, you need to be able to reap the rewards, and be ready for a return to interesting times!
Author and entrepreneur Bernz Jayma P. is the owner of a financial blog dedicated to helping people expand their knowledge on personal finance. You may visit his blog at http://www.Invesmint.com
Article Source: http://EzineArticles.com/?expert=Bernz_Jayma_P.
Wednesday, March 18, 2009
Retirement Plans - Diversification For Our Generation
Planning for your retirement can be nerve racking, yet it is something that we all must do if we want to live a secure life after we stop working. With so many different types of retirement plans out there today, how do you know which one to use? 401k's, IRA's, the list goes on and on. Which one should I use? How much should I invest? It's enough to make your head spin. Since there are so many options and so many rules, many people stick to the basics and use the one that the company they are working for use.
Most retirement plans are managed by large corporations, which ultimately charge you to keep and invest your money with them. You're giving your hard earned money away to someone you don't even know! Wouldn't you rather put it towards something that you can directly see? Something that you have the ability to make changes to at anytime with no finance charges or hidden fees?
With your retirement plan, you are restricted in many ways.
-How much you can or can't invest.
-When you can use the money you have earned.
-When you can change your investment types.
-How much return is possible.
That is just a few, but the list is never ending. It's true, retirement plans are easy. You don't have to touch them. You don't have to look at them, though you should. You don't even have to see the money that you are putting into it if you have them directly taken out of your check.
But with the stock market being in the dumps, your money has not been making money for the last few years. Instead, it's been losing money! I personally have lost almost half of the value of my 401k due to the recent market conditions. Why not try something different? The investors tell you to diversify and not put all of your eggs in one basket, yet they put all of your eggs in the mutual fund basket!
Isn't the purpose of a retirement fund, to make money for you to have when you retire? What if you could build a business on the side to make money that will continue to make you money for the rest of your life? I have attached a link below to show you a few of those proven methods that thousands of people are using today to supplement their failing retirement plans.
Stop waiting for the market to turn and take your future into your own hands. Stop giving you money to someone who really doesn't care if you lose money. Diversify your life and stop wondering what life will be like when you retire. Make your own future. Take control over your money and live out your dreams.
http://easyonlinemoneymakingtechniques.com/
Article Source: http://EzineArticles.com/?expert=Thomas_Stillman
Most retirement plans are managed by large corporations, which ultimately charge you to keep and invest your money with them. You're giving your hard earned money away to someone you don't even know! Wouldn't you rather put it towards something that you can directly see? Something that you have the ability to make changes to at anytime with no finance charges or hidden fees?
With your retirement plan, you are restricted in many ways.
-How much you can or can't invest.
-When you can use the money you have earned.
-When you can change your investment types.
-How much return is possible.
That is just a few, but the list is never ending. It's true, retirement plans are easy. You don't have to touch them. You don't have to look at them, though you should. You don't even have to see the money that you are putting into it if you have them directly taken out of your check.
But with the stock market being in the dumps, your money has not been making money for the last few years. Instead, it's been losing money! I personally have lost almost half of the value of my 401k due to the recent market conditions. Why not try something different? The investors tell you to diversify and not put all of your eggs in one basket, yet they put all of your eggs in the mutual fund basket!
Isn't the purpose of a retirement fund, to make money for you to have when you retire? What if you could build a business on the side to make money that will continue to make you money for the rest of your life? I have attached a link below to show you a few of those proven methods that thousands of people are using today to supplement their failing retirement plans.
Stop waiting for the market to turn and take your future into your own hands. Stop giving you money to someone who really doesn't care if you lose money. Diversify your life and stop wondering what life will be like when you retire. Make your own future. Take control over your money and live out your dreams.
http://easyonlinemoneymakingtechniques.com/
Article Source: http://EzineArticles.com/?expert=Thomas_Stillman
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