What is 401(k) plan?

401(k) plan allows a person to place part of their current pay in a retirement plan. The income tax on the amount is deferred until the money is actually made available during retirement.

Why does the government allow 401(k) plan?

The future Social Security benefits may not provide sufficient income for retired persons, the government put provisions like 401(k) in place to encourage individuals to do their own retirement savings.

How does a 401(k) plan work?

As a company, we sponsor the 401(k) plan and oversee its administration. Your participation is voluntary. Typically, you as an eligible employee specifies the amount to  set aside and your contributions are made to the plan via payroll deductions. We also match a portion of the your contribution, please speak to a payroll & billing Specialist 24X7 at (800) 454-3936 for more information about matching. The plan generally has several investment options, with varying amounts of risk and return, intended to provide growth of the amount invested. You can split up their contributions so that portions go into the different investment options.

At what age should I start contributing to a 401(k) plan?

We recommend that your retirement income should deliver approximately 70% to 80% of their pre-retirement salary. Because people are living longer, retirement plan investments can be an important component of financial resources for retirement (according to the National Center for Health Statistics, by the year 2010, a 65-year-old will live another 15 to 20 years).

How does a 401(k) plan compare to a traditional savings account?

A 401(k) plan has the advantage of providing tax-deferred savings and growth. Participants pay no federal income tax on contributions and earnings until they withdraw the money. Generally, this happens at retirement, when they may be in a lower tax bracket. A savings account, on the other hand, offers no tax breaks. Taxes are paid on the income before it is put into a savings account and also on any interest income generated from the principal.

I am an H1B Worker, can I participate?

Yes, 401(k) plan is open to everyone legally working in the United States.

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Administrator