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In the United States of America, a 401(k) retirement savings plan allows a worker to save for retirement and have the savings invested while deferring current income taxes on the saved money and earnings until withdrawal. The employee elects to have a portion of his or her wages paid directly, or "deferred," into his or her 401(k) account. This deferment is also known as a "contribution." 401(k) plans are mainly employer sponsored plans; the employer can, as a benefit to the employee, optionally choose to "match" part or all of the employee's contribution by depositing additional amounts in the employee's 401(k) account or simply offer a profit sharing contribution to the plan. In participant-directed plans (the most common option), the employee can select from a number of investment options, usually an assortment of mutual funds that emphasize stocks, bonds, money market investments, or some mix of the above. Many companies' 401(k) plans also offer the option to purchase the company's stock. The employee can generally re-allocate money among these investment choices at any time. In the less common trustee-directed 401(k) plans, the employer appoints trustees who decide how the plan's assets will be invested. The title "401(k)" references 26 U.S.C. § 401(k), a section of the Internal Revenue Code. Some assets in 401(k) plans are tax deferred. Before the January 1, 2006, effective date of the designated Roth account provisions, all 401(k) contributions were on a pre-tax basis (i.e., no income tax is withheld on the income in the year it is contributed), and the contributions and growth on them are not taxed until the money is withdrawn. With the enactment of the Roth provisions, participants in 401(k) plans that have the proper amendments can allocate some or all of their contributions to a separate designated Roth account, commonly known as a Roth 401(k). Qualified distributions from a designated Roth account are tax free, while contributions to them are on an after-tax basis (i.e., income tax is paid or withheld on the income in the year contributed). In addition to Roth and pre-tax contributions, some participants may have after-tax contributions in their 401(k) accounts. The after-tax contributions are treated as after-tax basis and may be withdrawn without tax. The growth on after-tax amounts not in a designated Roth account is taxed as ordinary income. From Wikipedia under the
GNU Free Documentation License What's a good 401K allocation mix for these current times for a 45 year old person? Q. We recently got a new 401K and need to decide our allocation mix between large caps, foreign and bonds. Not sure if I should take the current economic situation into consideration or just stay the course. Thanks! Asked by Emily Dew - Mon Jan 28 20:05:18 2008 - - 4 Answers - 0 Comments A. You should not take the current economic situation into consideration. A 401k is a long term investment. You still have about 20 years until retirement. Dont invest for the long term, with a short term view. You should have about the same percentage as your age invested in bonds, and the rest in equities, with about 20 percent or so in international equities. But the percentages depend on your other assets, other income you will have at retirement and your risk tolerance. Answered by jeff410 - Mon Jan 28 20:14:08 2008 How old must you be to enroll in a 401k within your company? Q. Hi all! My son's girlfriend is only 19 and her company has a 401k program. She was told that she can not contribute until she is 21. They live in Illinois. Does anyone know if there are age restrictions on beginning a 401K? Thanks in advance for your answers! Asked by zonagal43 - Tue Oct 21 13:55:32 2008 - - 7 Answers - 0 Comments A. The statutory eligiblty set by the IRS for 401(k) plans is 1 year of service (defined as working more than 1000 hours) and age 21. The plan must also provide two entry dates, one at the the beginning of the plan year or six months following the completion of the requirements . From there companies can pick their own eligiblity requirements, as long as it does not exceed the IRS statutory. Answered by Emo - Wed Oct 22 15:36:10 2008 How do you take out an early 401k withdrawal?
Q. I see all over the internet people mentioning cashing in their 401k early to pay off debt. I just tried to do that exact same thing, yet according to my representative, (who put me on hold to verify with someone else) there is not one single legal way I can cash in my 401k early without qualifying for a Hardship Withdrawal and providing proof from a very limited list of acceptable documents for them to investigate. Which is the truth here: Have people closed out their 401k early to pay off debt, or is there no legal way to do so? Asked by Jen - Tue Sep 4 11:12:48 2007 - - 7 Answers - 0 Comments A. Are these people cashing in their 401k early, people who are older and retired? As Plea_of_insanity states, there is no legal way to withdraw from your plan (while still employed) unless you qualify for the Hardship withdrawal or take a loan on your 401k. BTW Plea_of_insanity, you tricky tricky man. Asking questions you already know the answer to! Tsk Tsk! ;P I wondered why you looked familiar... Answered by www.ocbeautybeat.blogspot.com - Tue Sep 4 14:07:13 2007 From Yahoo Answer Search: "401k" From Wikiquote under the GNU Free Documentation License. See also:
 news.google.com KOAM-TV Everyone wants to maximize their 401k plan's value. We want our 401k account to go up in value all of the time, don't we? ... and more » news.google.com BusinessWeek ... what your pension or 401k is going to produce in the future, and how much your current liabilities are going to steal away from your future earnings. ... and more » news.google.com MarketWatch (press release) During this same time, the company also increased the number of employees who have health benefits, 401k packages and paid leave, from 12 employees in 2008 ... and more » From Google News Search: "401k"  yoboy.com.au 500px x 500px | 34.10kB [source page] Sorry Out of Stock f a s t 401K is the ultimate in adjustable response systems The body is Precision From Yahoo Image Search: "401k"  bogleheads.org unknown Mon, 01 Mar 2010 20:10:12 GM I suspect the purpose of the company is to allow an employer or investment committee to compare their own . 401k. to those of other employers. Thus, this information is useful to plan fiduciaries in improving their plans. ...  conservativenc.com Sat, 27 Feb 2010 04:00:00 GM You will never see your . 401 K. or IRA. It will be forcibly invested into buying up government debt ( T bills). T bills (along with the dollar) are going in the sewer. Good investors are no longer buying treasury debt because they ...  hr.blr.com HR.BLR.com Editorial Staff Mon, 15 Feb 2010 05:00:00 GM 401(k. ) Match Is Back, Survey Finds - Human resources News on Retirement Savings/. 401(k. ) From Google Blog Search: "401k" |
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