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Understanding the 401(k) Retirement Plan: Benefits and Management

The 401(k) plan is a retirement savings option for employees of participating companies, allowing individuals to save and invest a portion of their paycheck before taxes. Established by the federal government in 1981, it offers the flexibility to choose deduction amounts and investment options. Participants may take loans against their account, but withdrawals are restricted and subject to taxation. Professionally managed, a 401(k) is an effective way to build retirement savings while enjoying tax advantages.

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Understanding the 401(k) Retirement Plan: Benefits and Management

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  1. Natalie King Period 8 Date: 4-23-10 EXER 2r3-retire401k 401(K) Plan Upton Investment Group

  2. OVERVIEW • What is It? • How does it work? • Loans/Withdrawals • A Great Way To Save • Managed by Professionals

  3. WHAT IS IT? • Type of retirement plan for employees of participating companies • Save and invest money deducted from paycheck • Established by Federal Government in 1981

  4. HOW DOES IT WORK? • You decide how much to deduct from each paycheck • There is a legal maximum • Deductions are not taxed • You decide how to invest the money

  5. LOANS/WITHDRAWALS • Depending on your 401(K) plan rules, you can borrow money from your account • Withdrawals are restricted • Money is for retirement, after age 59 ½ • Withdrawals are subject to a 20% tax • Possible additional 10% early withdrawal penalty

  6. MANAGED BY PROFESSIONALS

  7. A GREAT WAY TO SAVE

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