411 on 401(k): Retirement Basics and Financial Planners
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staff on Tue, 02/02/2010 at 9:04am.
A 401(k) is a common retirement fund term that is thrown around but not always explained. These funds are fairly easy to explain and often easy to use as you plan for a retirement.
A 401(k) is a retirement fund that may be offered by your employer. Money is deferred from your salary and goes straight into a fund before the money is taxed. The money can then gain interest based on various choices made by you or your employer. Funds gain interest by stock, bond, or mutual fund investments; by flat-rate interest; through money markets; or a variety of other employer- or employee-created programs.
Using a financial planner when designing or managing 401(k) plans can be a smart financial moves. Because 401(k)s are not the only way to plan for retirement, financial planners can help you find the best way to maximize your retirement funds and plan for your financial future.
401(k) funds can typically be accessed at predetermined times: death, retirement, disability, age 59.5, or termination of employment. Failure to meet this terms can result in penalty fees.
Many employers offer a match for money added to 401(k) funds. Employers have the option of adding a certain amount to employees' 401(k) funds, matching the employees' deposits at a certain percent. This is one good way to maximize 401(k) amounts.
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