Established by many employers, a 401k plan allows employees to make contributions to a retirement account on either a post-tax or pre-tax basis. These funds are ordinarily automatically withdrawn from your check regularly and placed in the account with earnings accruing on a tax-deferred basis. 401 k plans are particularly popular because employees feel as if they are receiving an extra perk from their employer. These plans are also great for people who may need reminders to invest as the money is automatically deposited in to the account during each pay period. Many employers who offer a 401k plan make matching contributions to the plan on behalf of the employee. Some employers also add a profit-sharing feature to the plan. Most companies use financial services firms to direct and manage employees’ investments.
There are some restrictions on how much money can be placed into a 401k plan per year. There are also some restrictions on how and when employees can withdraw these assets. There are often high penalties for withdrawing these funds before the employee reaches retirement age.
Call 419-475-8665 or fill out our on-line request form for more information or to schedule an exploratory appointment with our experienced professionals at Savage & Associates.