401(k) BENEFITS – 5 Advantages of Having This Retirement Plan

List of 5 401(k) Benefits You Can Get From this Retirement Plan

401(k) BENEFITS – Here is a list of the five(5) advantages of having 401(k) as your retirement plan.

More and more people in the United States are considering retirement plans nowadays. A lot of individuals wanted to secure their lives when the time comes that they would have to stop from working.

If you would search about retirement plans online, you will have to deal with a long list of plans offered. However, not of all of it may provide you with the same benefits.

If you want a employee-friendly one, you may consider the 401(k). Under this retirement plan, you are not only the one saving for your future. Your employer may also contribute an amount that would be kept for your retirement.

The employer has the option whether to match or not the amount that is saved by his or her employee annually. You may fully enjoy the amount when retirement comes as withdrawing it before you reach 59 1/2 would call for some deductions.

401(k) Benefits
Photo Courtesy of Pensions & Investments

Based on an article on U,S, News, here is a list of five(5) 401(k) benefits which you may yet to know about this retirement plan. These reasons will surely help you decided on which plan to go for.

1. The best interests of the employees are at the core under the 401(k) retirement plan.

According to the article, there is a financial safeguard on the part of the employee under the 401(k) as it is obliged to comply with the Employee Retirement Income Security Act (ERISA). Prudential Retirement President Phil Waldeck even stressed that the participants’ best interests are prioritized as there is a “fiduciary set of standards”.

2. It offers financial guidance.

Another excellent thing about the 401(k) is that it offers financial guidance. In line with this, counseling and education on the right way of handling your finances may be catered to prevent overspending most of the time.

3. The automatic enrollment is available.

One thing about new workers is that getting a retirement plan like the 401(k) is not usually a factor to them in starting a job. Many often mislook the reality that the earlier you start saving money, the better.

Also a good thing about this retirement plan is its automatic enrollment feature. It does not only promote convenience in making the contributions but as well as in signing up.

4. The 401(k) can be converted to Roth 401(k).

The 401(k) retirement plan can be combined with Roth IRA. When combined, it can have more benefits than Roth. According to financial planner Nick Holeman, it does not post an income limit unlike the Roth IRA where there is an income limit.

Based on the article, the employees who are under this combined retirement plan does not have to set limit at $5,500 for young workers and $6,500 for those aging 50 years old and older. You can save as much as you want.

5. The money under the Roth 401(k) is not subject to tax deductions.

One of the benefits of Roth IRA is that it is after-tax meaning, no tax deductions will take place when the retiree starts to withdraw his or her money. If the 401(k) is combined with Roth IRA, the employee-retiree can enjoy the tax-free benefit as well.

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