401K

Unlike with most other pension plans, 401(k) plans give employees the opportunity to save additional funds for retirement. Participating employees elect to defer a portion of their compensation on a tax deferred basis to a qualified retirement plan. By doing so, they avoid current income taxes on the contribution and do not pay tax until the benefits are distributed.

The amount of contribution that can be deferred by an employee is limited by the tax law. Companies may also make matching contributions on behalf of each participating employee. If your company already has a profit-sharing or other “defined contribution” plan, a 401(k) option may be an easy and inexpensive to add.

Rolling-over 401(k) benefits
If you have recently left a company that you were participating in a 401(k) plan; you may need to take action in rolling over your benefits from that plan. Since you have made personal contributions to that plan, you are entitled to some, if not all of the money left in your account. It is important that you seek out a financial advisor as to what to do with these retirement assets. Making the wrong decision may result in negative tax implications and penalties.