What exactly is 401K ??

Question

I just got hired at a pretty well off company, and they said I am eligibile for their 401k plan after 3 months, I've heard it's good for your future but I don't completley understand how this works exactly ??

Answer 1

You put money in without that money being taxed. For example, if you make $100 you normally will pay about $25 in tax leaving you with $75. But if you put that $100 into a 401K, the entire $100 will go into the account, no tax. You then earn interest etc. on the $100. It's a great deal. When you retire, you will pay taxes as you withdraw the money, but in the meantime, you have gotten many decades of interest or returns on that tax money. Do it!

Answer 2

You set aside pre-tax dollars for your retirement. They go into a 401k account and usually your employer contributes as well. Your funds manager (Fidelity Investments for instance) invests your money in stocks and bonds and you will theoretically have quite a bit of money by the time you retire. Aim to invest 8% of your salary into your 401k, more if you can afford it and you should have a nice cushion for retirement.
-HR Girl

Answer 3

Hi good luck with your new job,you are in good hand,401k is Passion policy saving and it's a small saving but a lot in old age.Good luck.

Answer 4

its a retirment plan...Basically a little bit of money is deducted from your paycheck each week and is put into another "account". (401k)
after years of it growing and growing it becomes you retirement money. trust me sign up for it! you'll need it one day!
good luck at the new job!

Answer 5

It's a great retirement plan. Maybe its described on wikipedia. I recommend it. Do they match your contributions?

Answer 6

http://en.wikipedia.org/wiki/401K

Answer 7

a retirement plan...
........good company!