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How much is a 401k retirement paln

2007-01-03 09:34:19 · 3 answers · asked by Valerie M 1 in Business & Finance Other - Business & Finance

3 answers

Depends on your company. You may be able to make contributions in to the account. If so the maximum amount is 25% of salary. Most people contribute 1-10%. Some companies then have Employer contributions. The Company will make contributions into your account. Some have matching contributions wehere they will match a % of your contribution. The matching can be as high as 100%. If you need to know ask your company for the Summary Plan Description. That will have the info you need.

2007-01-03 09:45:08 · answer #1 · answered by mitchellinho 4 · 0 0

401(k) plans are a way for you to put aside some of your own paycheck before the government takes taxes out of it. This is good because often times the difference between your paycheck before a 401(k) deduction and after a 401(k) deduction is smaller than you would think. Plus, many times an employer will match your contributions in some way. Let's say they will contribute half of what you contribute (a 50% match) up until you contribute 6% of your salary. This means that if your paycheck is $1,000, and you are contributing $60, your employer will contribute $30 for free. This means that even though you are only contributing $60, you will have $90 going into your account. Basically, you are getting paid money to save your own money. You should never turn down free money.

Another thing that often goes along with a employer matched 401(k) plan is a vesting schedule. What this means is that the longer you are with the company, the more of that free money is yours to keep. Just because they are putting the free money in your 401(k) account, doesn't mean it is all yours. If there is a vesting schedule, then you are vested (own a percentage of the free money) at different levels at different times. If you are lucky, you will have an employer that doesn't have a vesting schedule, or one that makes you 100% vested from the time you start contributing. However, the common thing is that you are more and more vested the longer you are with the company (like 20% vested for the first 3 years, 50% vested from 3-6 years, 70% vested from 6-10 years, and 100% vested at 10 years). The money that you put in from your own paycheck is always 100% yours, the vesting only applies to the free money that the company puts in.

2007-01-03 17:48:45 · answer #2 · answered by Kevin P 3 · 0 0

401k accounts are funded by you and sometimes your employer.. In my case I donate 7% of my income to my 401K and my employer matches 4%.

2007-01-03 17:37:20 · answer #3 · answered by tchem75 5 · 0 0

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