401k Retirement Account Basics

Starting a 401k retirement account is one of the best financial decisions that you can make in your life. If your employer offers a 401k, you will most definitely want to take advantage of it. Here are the basics of a 401k retirement account. 

Contributions

With a 401k retirement account, you will be able to contribute pretax dollars to it. Your employer will set it up so that a certain percentage of your paycheck is deposited automatically into the account. This will be taken out before the taxes are calculated. With this type of account, you can set aside up to $16,500 per year toward your retirement.

Investment

With the funds that you contribute to your account, you will be able to invest in the financial markets. Your 401(k) provider will have a list of mutual funds and other investments that you can choose from. The returns that you get from investing are allowed to grow tax-free in the account.

Employer Match

Many employers will choose to match the amount of money that their employees put into their accounts up to a certain percentage. The employer gets to deduct this amount from their taxes and it can help build the retirement accounts of their employees.

blog comments powered by Disqus