Retirement Sustainability Report
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401k
A 401k is an employer-sponsored, long-term savings plan that is intended to help you sock-away money for your retirement. A 401k offers significant tax breaks and has a few drawbacks. The money you put away now to be used later after 59 ½ years of age or at retirement is not taxed until it is distributed. Some companies match part of the dollars that you stash away. Your retirement savings are increased through these employer matching contributions. You can borrow against a portion of a 401K, as long as you pay it back plus the low interest. Otherwise, if you tap into your savings before 59 ½, you pay penalties for early withdrawal and the early distribution is also treated as regular income for tax purposes.
Too Many Choices
Submitted by tom on
8,000+ mutual fund choices available.
For every ten mutual funds an employer offers in defined contribution plans, the rate of participation goes down 2 percent.
Dozens of options are typically available in 401k plans and variable annuities.
Is a rich menu of decision options a positive or simply excessive--is it liberating or does it produce inaction/paralysis.
The following talk (from a recent TED Conference) discusses what the author calls "the paradox of choice":
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Annuities through Employers
Submitted by tom on
There is a good article in CFO Magazine that discusses in-plan annuities--in other words, annuities within defined contribution
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What happens to the money I have put into my 401k if I no longer work for the company?
The first thing you should do is check with your previous employer--likely the human resources department--to hear about the plan policy directly from them.
That said, the contributions you have made to the 401k plan and any employer contributions that are vested are your property.
Generally, there are several options available to employees when they leave an employer:
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In-Plan Annuities
Submitted by tom on
It is reported that asset manager BlackRock has created a target date fund offering with an annuity for defined contribution pension plans.
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