Epmloyees 401K

If you're trying to uncover Epmloyees 401K help, you're sure at the right place! This place is chock-full of tips and explanations on how 401k's work plus there are all kinds of tips, tricks and frequently asked questions you can go over and review. We hope you find this page to be helpful and informative for you! Picking and choosing the right retirement program can be hard if you don't know what you should be looking for, so we've set this page up with as much 401 k information as we could get for you and made sure it's painless and easy. Here you go...

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Good reason to use a 401k for your investing:

There are many advantages to 401(k) plans. First, since the employee is allowed to contribute to his/her 401(k) with pre-tax money, it reduces the amount of tax paid out of each pay check. Second, all employer contributions and any growth in the capital grow tax-free until withdrawal. The compounding effect of consistent periodic contributions over the period of 20 or 30 years is quite dramatic. Third, the employee can decide where to direct future contributions and/or current savings, giving much control over the investments to the employee. Fourth, if your company matches your contributions, it's like getting extra money on top of your salary. Fifth, unlike a pension, all contributions can be moved from one company's plan to the next company's plan (or to an IRA) if a participant changes jobs. Sixth, because the program is a personal investment program for your retirement, it is protected by pension (ERISA) laws. This includes the additional protection of the funds from garnishment or attachment by creditors or assigned to anyone else, except in the case of domestic relations court cases dealing with divorce decree or child support orders (QDROs; i.e., qualified domestic relations orders). Finally, while the 401(k) is similar in nature to an IRA, an IRA won't enjoy any matching company contributions, and personal IRA contributions are subject to much lower limits.

Epmloyees 401K Tips:

The maximum before-tax contribution limit is subject to the catch-up provision, which is available to employees who are over 50 years old. This provision allows these employees to contribute extra amounts over and above the limit in effect for that year. The additional contribution amount is $4,000 in 2005 and $5,000 in 2006; thereafter, it increases by $500 annually.

Terms You Should Know:

Wrap Fee: A charge for an investment program that bundles or "wraps" together a number of services (such as brokerage, advisory, research, consulting, and management services) and covers them with a single fee. Typically the wrap fee is based on the value of 401(k) assets being managed.

Back-End Load: The sales charges assessed when the investor removes money from the investment. Generally declines with the time the investors own the shares. Usually starts out at 6% for the first year and gets smaller each year thereafter until it reaches zero (usually in the sixth or seventh year of owning the investment). Also called a deferred load, deferred sales charge or exit charge. Back-end loads are used primarily to pay a commission to the broker/dealer who sold the fund to the investor. Often coupled with 12b-1 fees.

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Important Rules about 401k's:

General Distribution Rules:
Hardship Distributions. A distribution is deemed to be on account of an immediate and heavy financial need of the employee if the distribution is for:

*Expenses for medical care previously incurred by the employee, the employee’s spouse, or any dependents of the employee or necessary for these persons to obtain medical care;
*Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);
*Payment of tuition, related educational fees, and room and board expenses, for the next 12 months of postsecondary education for the employee, or the employee’s spouse, children, or dependents;
*Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence;
*Funeral expenses; or
*Certain expenses relating to the repair of damage to the employee’s principal residence.

Distribution necessary to satisfy financial need. A distribution may not be treated as necessary to satisfy an immediate and heavy financial need of an employee to the extent the amount of the distribution is in excess of the amount required to relieve the financial need or to the extent the need may be satisfied from other resources that are reasonably available to the employee.

What is a 401(k)?

A 401(k) is a type of retirement plan that allows employees to save and invest for their own retirement. Through a 401(k), you can authorize your employer to deduct a certain amount of money from your paycheck before taxes are calculated, and to invest it in the 401(k) plan. Your money is invested in investment options that you choose from the ones offered through your company's plan. The federal government established the 401(k) in 1981 with special tax advantages, to encourage people to prepare for retirement. They get their catchy name from the section of the Internal Revenue Code which established them (you guessed it, section 401(k)).

**Disclaimer** The information on this page is as accurate as we could get it but is meant for information purpose only. It's not meant to be legal advice in which you use to make financial decisions. For any legal or financial matters, you should seek out a certified 401k or investment company or individual.

Other words associated with this page and topic would be: 401K Retirement Contribution, ira distributions, or Tax 401K To