What should you know about the 401(k) Plan?
Retirement plans are catching the imagination of many employers these days. They are harnessing these as a great of engaging employees. Under these plans, employees can save according to defined contribution plans on a tax deferred basis. These days a number of retirement savings plans sponsored by the employers are available and employers can select the best plan keeping in mind their audience. Lets’ understand in detail about the 401(k) plan.
Eligibility and defined contribution
This plan is offered to people that work in public of private for- profit companies. The best point that works in favor of this plan is that the contribution is deducted from your gross salary. So this lowers your taxable income and hence reduces your taxes while also adding up your savings. If you want to contribute some amount from your post tax salary, you have these options too. Just check in with your financial advisor, so you know what will suit you better. Each and every plan comes with a different set of eligibility criterion. So it is advisable to check the plan comprehensively that is specific to your requirements and company. Generally both employers and employees wait from almost six months to one year before the contribution starts and still others start almost immediately. It is compulsory for the employers to match their contribution with the employees up to a fixed percentage only.
Withdrawl process
You should start withdrawing from your 401(k) savings account once you attain the age of 70 years. In case you are still a full time employee, you can of course delay it.
Benefits of 401(k) plan:
Some employers use tools like NetBenefits to keep a tab on what they are spending on employee retirement. So it is a mutual benefit for both parties. NetBenefits can be used to view all employer sponsored plans, health plans, insurance plans and insurance claims, pensions, and Human Resources related data, payroll and the like. Quite a lot if you ask me! The website also educates you on personal finance planning, portfolio management and account management. All in all it is a truly comprehensive website. Investors can keep a check on their current rates of return and online statements. They can also make changes to their financial plans in case need arises. However, do check the number of times such changes are allowed as there might be a restriction on it.
More and more people are getting aware of the importance of using such services. After all you can’t keep paying off your home loan even after retirement. These plans give you access to all the savings accumulated over time in your account. There is also access to online learning workshops because any sort of financial education will only be an asset later on. They cover diversification and allocation options of investments. Retirement programs of different service providers vary from company to company. An online search is a good way to get all this information or you can even consult your financial planner.
Employers throughout the world are taking the advantage of these retirement plans and gaining the confidence of their employees.
Eligibility and defined contribution
This plan is offered to people that work in public of private for- profit companies. The best point that works in favor of this plan is that the contribution is deducted from your gross salary. So this lowers your taxable income and hence reduces your taxes while also adding up your savings. If you want to contribute some amount from your post tax salary, you have these options too. Just check in with your financial advisor, so you know what will suit you better. Each and every plan comes with a different set of eligibility criterion. So it is advisable to check the plan comprehensively that is specific to your requirements and company. Generally both employers and employees wait from almost six months to one year before the contribution starts and still others start almost immediately. It is compulsory for the employers to match their contribution with the employees up to a fixed percentage only.
Withdrawl process
You should start withdrawing from your 401(k) savings account once you attain the age of 70 years. In case you are still a full time employee, you can of course delay it.
Benefits of 401(k) plan:
- Lower taxable income as explained earlier
- Matching employer contribution
- Guaranteed savings for retirement
- Inflation proof contribution
- This 401(k) plan can be rolled over to your next employer also
Some employers use tools like NetBenefits to keep a tab on what they are spending on employee retirement. So it is a mutual benefit for both parties. NetBenefits can be used to view all employer sponsored plans, health plans, insurance plans and insurance claims, pensions, and Human Resources related data, payroll and the like. Quite a lot if you ask me! The website also educates you on personal finance planning, portfolio management and account management. All in all it is a truly comprehensive website. Investors can keep a check on their current rates of return and online statements. They can also make changes to their financial plans in case need arises. However, do check the number of times such changes are allowed as there might be a restriction on it.
More and more people are getting aware of the importance of using such services. After all you can’t keep paying off your home loan even after retirement. These plans give you access to all the savings accumulated over time in your account. There is also access to online learning workshops because any sort of financial education will only be an asset later on. They cover diversification and allocation options of investments. Retirement programs of different service providers vary from company to company. An online search is a good way to get all this information or you can even consult your financial planner.
Employers throughout the world are taking the advantage of these retirement plans and gaining the confidence of their employees.