401K Limit : Things You Should Know About This Retirement Income
Employees in the U.S. are now being offered the chance to save for their golden years with 401K plan. This type of retirement plan, individuals who enrolled will be mandated to give monetary share regularly. Several companies now decide to match their employees’ contribution to the retirement plan as one of their benefits to employees.
For newbies, information regarding loans will be difficult to understand, so it should be digested first to be able to make a sound judgment. When you are looking for information on this retirement income plan, you will surely come across 401K limit. The U.S. Internal Revenue Service is the government body that imposes rules related to the plan. Members of the 401K plan can set on the percentage of their pay that will be put to the plan. When it comes to 401K withdrawals, plan administrators are strict about this especially if you are younger than 59 years old. Don’t lose hope that you cannot take out what you contributed in your plan, it’s just that you have to prepare for penalties and taxes that go with it.
If you want to see a clearer picture of your contribution, an example will be presented here. If you have a pre-tax pay of $3500 and you have decided to set aside 10 percent for the plan, then the amount that will be deducted amounts to $350. You have to declare the said percentage to your employer so that no mistakes will be committed. Young members of the plan, specifically those under 50, can contribute to as much as $15,500.
Since this plan is not compulsory for all workers, one can choose not to become a member. This could be a very wrong move especially if their employers will match their employees’ contribution. As employees retire, they can be assured of regular income, thanks to 401K plan, so it’s a must to become a member as early as today.
Now, if you are one of those who enrolled, you have to know your rights and how you can enjoy your savings once you retire. People in the retirement stage may feel a lot of pressure, including where to get regular flow of money. So, preparing as early as today indicates that you want to make sure that you will have a very bright future. When it’s time to retire, you will have no regrets whatsoever because you are secured financially.