The 401(k) Workplace Plan
01.Tax-Deferred Savings
A 401(k) is an employer-sponsored retirement account. Contributions are deducted directly from your paycheck before taxes, lowering your tax bill today. The money grows tax-deferred, and you only pay taxes when you withdraw it in retirement.
02.The Employer Match
Many companies offer a match (for example, dollar-for-dollar up to 4% of your salary). This is free money and an instant 100% return on your investment! Always contribute at least enough to get the full employer match.
03.Vesting Schedules
Understand your company's vesting schedule, which determines when you fully own the matching funds. If you leave the job before vesting, you may lose a portion of the employer's contributions.