Aug 10


The 401(k) Plan has become the most widely recognized and utilized qualified retirement plan in the United States. Established as a subsection in 1978 to Internal Revenue Code (IRC) 401, signed into law on January 1, 1980, the allowance of deferral of income for tax purposes has made the 401(k) plan the retirement plan of that and subsequent generations of workers in America. In 1985 there were eight (8) million participants in 401(k) plans with over 0mm in assets. As of the end of 2010 that number had grown to 65 million participants with over .1 trillion in retirement assets. Only government plans (.4 trillion) and IRA investments (.7 trillion) surpass the deposits in 401(k) plans today. With its ease to establish and maintain and its generous individual funding limits, 500 for an individual under age 50 and 000 for anyone age 50 and over, this is the go to plan for most employers today. When plan level limits of 000 per year exist, most employers are sold on its benefits. These plans can be cross-tested to allow for greater contributions to be made to older workers with less time to accumulate. 401(k)s are often paired with a Cash Balance plan to offer the maximum tax savings to an employer given todays contribution limits. With the average worker today needing around 0000 in retirement savings to adequately fund a retirement that may last 20-25 years, the ability to save is even more important. The costs to establish this kind of plan is extremely
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