As employees get closer to their retirement years and financial management becomes more structured, the benefits of establishing a good 401k retirement strategy become pronounced. In fact, one might say a solid 401k retirement game plan is essential.
The advantages of employer-sponsored plans are real, and they have helped millions of workers save for retirement. Simply put, employer-sponsored plans are vital for many middle-class workers. According to the American Retirement Association, only five percent of employees making between $30,000 and $50,000 will contribute to an IRA, but 70 percent of these workers will contribute to an employer-sponsored retirement plan.
The IRS helps the cause by providing incentives such as deferred taxable income, but the big advantage for employees is the matching 401k contributions an employer can offer. For employers, these same tax savings are a critical component in a small business owner’s decision to establish and maintain an employer-sponsored retirement plan if such a plan isn’t mandatory.
For employees, the appeal of a 401k plan should be obvious. Here is an easy, tax-friendly way to set aside money for retirement.
- Deductions are made automatically each pay period.
- A third-party administrator runs the account.
- Employees can tailor their investment portfolio as they see fit, which gives workers at various life stages the flexibility they need.
A subsidiary of The Plexus Groupe, Plexus Financial Services provides independent, objective advice on corporate retirement planning, which is its sole focus. For more information on Plexus Financial Services, visit plexusfs.com.
American Retirement Association. Retirement Issues.
The Wall Street Journal, How-to Guide. What is a 401K?
Plexus Financial Services is located at 21805 West Field Parkway, Suite 300, Deer Park, IL 60010. Securities and advisory services offered through Plexus Financial Services, LLC, Member FINRA/SIPC, a Registered Investment Adviser.