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Top 401k Plan Advantages

Author: Kimberly Rand

One of the most successful retirement plans today is the 401k. This can be proven by the number of individuals and companies investing in it. If you are new to the corporate world and would want to prepare for your retirement early, this is one retirement plan you should invest in. And while there are many other retirement plans out there, there is no question that the 401k has the greater advantage over them all.

One of the major advantages of the 401k retirement plan is that you, as the investor, have the freedom to decide how much you want to invest. This is a huge difference between this plan and traditional retirement plans that collect a fixed amount of money from investors. When choosing how much you want to invest, though, you should not forget that there are 401 k contribution limits to consider.

Another huge advantage of this plan is that it is tax-deferred, which means your income will not be taxed until the time you collect your benefits. This will give your money enough time to build interest and grow. Furthermore, with this plan, you do not just get to invest in whatever stock your company has, but in various mutual funds, CDs, and stocks as well.

Finally, the 401k allows you to transfer or “roll over” your plan in case you decide to choose another job. Not a lot of pension plans offer this kind of benefit. Moreover, most companies that offer 401k plans to employees have matching programs, where each amount of money you add to your plan will be matched by your employer. This matching program can be a huge advantage already as it produces instant profit on your part.

One of the things you need to be aware of about the 401k is that there is a 401 k contribution limit set by the IRA each year. Talking to a financial adviser will help you understand what this means and will help you learn more about the 401k. On the other hand, you can also search the World Wide Web for more information regarding this retirement plan.

Learning more about the 401k and the 401 k contribution limits is essential if you are to take advantage of the full benefits of this retirement plan. Talk to an adviser today and find out how this retirement plan works and how it can help you prepare for your golden years.

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