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Why should I, as an employee, participate in my company�s 401k plan?

Home » Small Business » Small Business 401k » Why should I, as an employee, participate in my company�s 401k plan?

Companies do not require you to enroll in a 401k plan, however, 401k plans offer several substantial advantages over other retirement plans, so you may find it worthwhile to participate. These are a few of the most prominent benefits of a 401k plan:

Tax-free investing: Your contributions are not only taken out pre-tax, but the interest that your 401k account accrues is generally tax-free until you begin withdrawing funds.
Employer contributions: If your employer is willing to match your contributions to your 401k account, or even give you fifty cents on the dollar, that is free money. Even if you could only contribute $1,000 in a year, that is $15,000-$30,000 (plus interest) over the course of thirty years, that you are throwing away.
Flexibility: One of the benefits of the 401k plan is that you decide how much to invest. In most cases, you can change the amount you invest during certain periods in accordance with what you can afford.
Solid and simple savings: If you have money, you are more likely to spend it. By having 401k contributions deducted from your paycheck, you don�t even have to deal with the temptations of spending money because you are already saving it. In addition, in many cases, 401k plans accrue more interest (and it�s tax-free interest) than do traditional bank accounts.

From the time you were a child, people were probably drilling into you the concept of saving money and being wise with your resources. 401k plans offer you the opportunity to do that without being an investment expert.

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