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Building The Foundation For Wealth
Building The Foundation For Wealth By C.C. Collins, Wealth Strategist, http://wealthscientist.com You wouldn’t build your home on anything less than a solid foundation. Similarly, you can’t build wealth and financial independence without first...
Can you afford Not to look After your Personal Finances?
Investing is a subject a lot of people don’t want to think about. And there is good reason for that. Investing seems scary. It either sounds like something only the rich do or something that only a skilled professional can do. But the truth is that...
Investing in stocks and shares
Stocks and shares, unit trusts and investment trusts Shares
give you part ownership of a company, so the value of your
investment is linked to how the company - and the overall
economy - performs. You can also invest in funds which buy
shares...
The 11 Best Money Saving Ideas of All Time - Part 4
At any time in history, no matter what the current state of the economy, no matter what the current trends, no matter what the unemployment rate is or where interest rates lurk, some money-saving ideas stay true.
Some of you may have heard...
Why Invest in the Stock Market?
With all the information and potent tools at our disposal, a boring 12% growth stock can return five times that value.
Why invest in the Stock Market? If you are reading this you have your hands on the best reason of all financial times!
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Understanding 401k Plans
What is a 401(k) plan?
The 401(k) retirement plan is funded by employee contribution
and a matching employer contribution. The major feature of the
plan is that the contributions are taken from pre-taxed salary.
The fund accumulates tax-free until it is withdrawn. Most
businesses and tax-exempt organizations can create these
retirement plans.
The 401(k) takes its name from the IRC (Internal Revenue Code)
of 1978. The operation of the 401(k) is administered by the EBSA
(Employee Benefits Security Administration) of the Department of
Labor.
The 401(k) plan has a lot of advantages. First and foremost is
that the employee can contribute pre-tax money that reduces the
tax paid in each paycheck. Also, the company contribution and
any growth in the fund is free of tax until withdrawn.
The compounding of the fund during a 20 to 30 year period is
quite amazing. The employee has a lot of control in the
direction of the future contributions. When the company matches
your contributions, it adds something extra on top of your own
money. All money in the plan can be moved from one company to
another unlike pension.
The 401(k) plan is protected by pension laws since it is a
personal investment plan. It includes protection from
garnishment by creditors but not from domestic cases that
include child support.
There are some disadvantages in the 401(k) plan, it is hard to
get your 401(k) contributions before age 60 (59 1/2 to
Associated Websites
be
exact). The 401(k) is not insured by the PBGC (Pension Benefit
Guaranty Corp). Also, the company contributions do not kick in
until a certain number of years of service have been given. The
rules state that company matching contributions must either be a
3 year 'cliff' plan (100 percent after 3 years) or a 6-year
'graded' plan.
Employees participating in a 401(k) plan have many options for
investment. In most cases a listing of mutual funds. The mutual
funds usually include money market fund, treasuries, stock funds
and bond funds. Some plans may include investing in company
stock and US Savings Bonds. The employee gets to choose how the
savings is invested. The employee can also choose at any time to
stop contributions.
Financial advisers usually say that the average 401(k)
contributor is non-aggressive in terms of their investment
options. Stocks have historically outperformed other types of
investment, since the 401(k) is a long term investment it should
be able to minimize the stock fluctuations.
About the author:
Jay is the web owner of http://www.retirement-in.com Retirement Planning, a
website that provides information and resources about
retirement, from retirement planning and calculation, to state
retirement systems and retirement homes. You can visit his
website at: http://www.retirement-in.com/Alabama/ Alabama
Retirement
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