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A 401(k) Plan Allows Workers To Save For Retirement While Deferring Income Taxes On Saved Money Or Earnings Until Withdrawal. Welcome To 401kGuide.us. This Free Information Resource Will Help You Make Informed Decisions About Your 401(k) Options. As
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401k Plans, Roth Ira News |
Turn Your 401k Into A Paycheck for Life Charlie Epstein, The 401k Coach, discusses how important it is to be as disciplined with your 401k as you are with your mortgage payments. Your worst 401k move Piling up stock in the company you work for is just doubling down on risk -- potentially making you a two-time loser. Make your 401k work harder Most of us neglect our retirement plans, an approach that's bound to fail to help us achieve our retirement goals. Here's a strategy for starting to turn that around.
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Brand new employer sponsored retirement plan is a hybrid of a traditional 401k and a Roth IRA.
Author: Simon Fox
Income tax rates have been cut, the marriage penalty done away
with, and the "death tax" is also on a path to no more. All of
this is a result of the Bush administration's Economic Growth
and Tax Relief Reconciliation Act which was passed by a
Republican congress in 2001. Another provision of that act goes
into effect on January 1st, 2006, a hybrid of a traditional 401k
and a traditional Roth IRA called the Roth 401k.
Yet another employer sponsored savings plan, the new Roth 401k
works in almost the same way as a traditional 401k plan. Workers invest a portion of their income into a fund
along with contributions from their employer (if any). The
difference is that the traditional 401k is funded with "pre-tax"
dollars and the Roth 401k plan uses "after-tax" dollars.
However, with the Roth 401k, withdrawal of your money at
retirement will be tax free like a Roth IRA
. The traditional 401k plan defers the tax owed during your
career until retirement.
Although it may sound like the best of both worlds, it is
important to note that no employer is required to offer this new
Roth 401k plan. In fact, a recent survey by employee benefits
consulting firm Hewitt and Associates found that only 31 % of
employers currently offering the traditional 401k plan are
considering implementing the new Roth 401k.
Employees may now want to begin inquiring whether their employer
will be offering the new retirement plan in 2006. Contribution
limits for the retirement plans are: in 2005, $14,000 for a 401k
and $4,000 for an IRA, whether Roth or traditional. In 2006,
this amount will increase to $15,000 for both 401k and IRAs.
For in depth answers to your retirement and investment
questions, visit to http://www.HowMuch
Answers.com - providing simple and easy to understand
information about 401k plans and IRA accounts.
About the author:
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401k Plans |
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A Quick Note
From The Publisher...
If you like the article above, you may be
interested in the following article which is also related to 401k Plans...
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The New Roth 401k Plan |
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There’s a new retirement plan soon to be available. It’s called a Roth 401k. President Bush brought this about in his 2001 tax cuts. This is a combination of two retirement funds – a 401k and a Roth IRA. But what does it mean?
Your 401k plan is pretax money set aside to grow as an investment. Your employer takes pretax money out of your check and allows you to direct the funds usually into mutual funds. 401k’s have another advantage – since it’s pretax money you take out of your check, your net pay is lowered, reducing the amount of taxes you pay. When you retire, then you draw out of your 401k what little you need and pay the taxes on it. When you retire, your income stream is gone, and so is your tax bracket. As you draw out your money from your 401k, then you hopefully enter a relatively low tax bracket and pay little on the proceeds.
Enter the Roth IRA. A Roth IRA is funded by after tax dollars. Anything put into this account will never be taxed again. You can open up your... |
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