Many of you have a 401k plan through your employer. We get a lot of 401k questions at CameronDowning. So here’s a post with some tips to make the most of this fantastic benefit.
401k plan basics
The technical name for the 401k plan is an employer-sponsored defined contribution plan with 401k provisions. Money goes into your account in different ways:
It used to be the case that you went to work for one employer and remained with that employer for the entirety of your working life. You received a pension from that employer when you retired – in other words, you continued to get paid a lesser amount even though you’d stopped working. This arrangement is no longer the norm – people expect to change jobs several times during their working lives. A 401K retirement plan suits this kind of work environment. When you leave one employer, you can move your 401K funds into the 401K of your new employer, or over to an IRA. In any event, the responsibility for providing a retirement income lies firmly with the worker!
Contributions are limited by IRS regulation. The maximum deferral that a plan participant can make in 2017 is 100% of salary up to $18,000. If you are age 50 or older, you may be able to make an additional $6,000 “catch-up”...