10 important 401k facts

Question 1

When I can start contributing?

Answer 1

Depending upon the company guidelines you can start contributing right away or after a certain amount of time

Question 2

Will I be enrolled automatically?

Answer 2

many companies automatically place you on a 401k plan unless you choose to opt out.

Question 3

Is there a company match and so what are the rules?

Answer 3

many employers match a certain amount of money for each dollar employees contribute to motivate them to contribute money to their investment plan. This can go up to a certain percentage of the employees salary

Question 4

How much can I contribute?

Answer 4

up to 18500 (below 50) and up to 24500 (above 50) in addition employer contributions/matchings.

Question 5

Can I sign up for automatic increases to my contribution?

Answer 5

In most companies the amount contributed to 401k plans automatically increase as salaries increase but can also be increased without salary increases in some cases.

Question 6

What’s investment options does the plan offer?

Answer 6

If choice is involved in what to invest in please consult professional to minimize risk

Question 7

Roth 401k’s vs regular

Answer 7

Roth 401k’s are only taxed when principle amount is added and when money in addition to principle amount is withdrawn (before 60) from account whereas regular 401 k’s are taxed when money is withdrawn before and after 60 (with penalty tax before.

Question 8

Maintaince cost and fees

Answer 8

May be fees to maintain investment plans and to purchase investment veichles such as stocks.

Question 9

Withdraw money early

Answer 9

Most cases you have to pay penalty tax and regular tax but in some cases you can simply borrow money, pay back by loan and interest to your account.