A 401(k) is a type of retirement savings plan that is usually backed by an employer. A 401(k) allows you to save and invest your money from your paycheck before the taxes are withheld. A 401(k) can be structured by you, the employee, and the employee can have input as to how their income is invested. A 401(k) plan can offer employees different types of mutual funds that can be comprised of a mix of stocks, bonds, and money market investments. A 401(k) can be one way to plan for your retirement and guarantee that you have money vested for the future.
A 401(k) can have some advantages and benefits, such as employer matching contributions, and tax deferred earnings. If an employee obtains a 401(k) plan through their employer, some employers will match a portion of the savings that is being contributed to the 401(k). Even if the employer doesn’t offer a matching program, the tax advantages of acquiring a 401(k) is still an excellent way to save for retirement. When the employee invests a percentage of their paycheck to their 401(k), the employee will instantly be paying less in taxes to Uncle Sam. Since the investment dollars are taken out of the employee’s paycheck before the taxes are deducted, this will make the employee’s taxable income less and could potentially lower the employee’s overall tax bill. To determine whether or not an employee is qualified for a 401(k), the employee should talk to their employer or to United Retirement Advisors Group to find out what the options are available in regards to any retirement savings plans