Last week we discussed why tax breaks are a great motivation to contribute to a 401(k). In this fourth and final week, we will discuss our last reason why you should contribute.
Reason number 4: Your money can go with you, job to job – If you change jobs, you can put your money into your new employer’s 401(k) plan, or roll the money into what is known as a Roth IRA. You have 60 days to rollover the money; after that time you have to pay taxes on that money and a 10% penalty if under the age of 59 1/2. Continue reading “Reasons to Contribute to your 401(k): Week 4 of 4”
We are now on week 3 of our 4-week discussion. Last week we discussed how automatic payroll deduction makes it easy to save with your 401(k). This week we will discuss yet another reason why contributing to your plan is a great decision!
Reason number 3: Tax Breaks – Contributing to your 401(k) plan can reduce your taxable income. The IRS allows you to put a maximum of $16,500 every year into a 401(k) plan (this number remains unchanged from 2009 to 2010). By contributing to your 401(k), you may be able to push yourself into a lower tax bracket, where you pay a lower tax rate. Note that if you take money out of your plan before you reach age 59 1/2, you may have to pay a penalty tax in addition to income tax on the money and profits. Continue reading “Reasons to Contribute to your 401(k): Week 3 of 4”
Last week we discussed how your company can help your investment grow. This week we will also discuss another great reason to contribute to your 401(k).
Reason number 2: Automatic Payroll Deduction – Automatic payroll deduction makes it easy to save with your 401(k) because you figure how much money you want to contribute to your plan and it is automatically deducted from your paycheck each pay period. Since you never see the money, you are not tempted to spend it! Continue reading “Reasons to Contribute to your 401(k): Week 2 of 4”
It is never too late to start saving money through your 401(k) plan. Why not start with the New Year? In the next four weeks, we will be addressing four different motives to contribute to your 401(k), so stay posted to learn why a 401(k) is a smart idea.
Reason number 1: Your company can help your investment grow. Most companies will contribute a certain amount for every dollar that you contribute up to a certain limit. By contributing the maximum amount, you allow your savings to grow that much faster! Continue reading “Reasons to Contribute to your 401K: Week 1 of 4”