Best 401(k) Plans Of 2022 – Forbes Advisor

A 401(k) is an employer-sponsored retirement plan that allows employees to contribute a certain percentage of their pay into a tax-advantaged account, and then determine how they would like to invest.

These types of plans are the most common retirement benefits offered to employees, according to a recent report by the Transamerica Center for Retirement Studies. More than half of employers offer a 401(k) or a similar type of defined contribution plan, per Transamerica. Nearly 90% of companies with more than 100 employees have one, compared to 46% of small businesses.

There’s a good reason why: employees like them. Roughly 80% of workers participate in a 401(k)-type plan when offered, per Transamerica, saving 12% of their pay.

Why do employers offer them? The top three reasons include:

  • Help employees save and prepare for retirement (57%)
  • Increase job satisfaction among employees (55%)
  • Inspire loyalty among employees (50%)

There are two main types: Traditional 401(k)s and Roth 401(k)s.

In a traditional 401(k), contributions are made before income taxes are applied, thereby lowering your current tax bill to Uncle Sam. Your account then grows tax-free over time, and faces income taxes when you withdraw from your account.

A Roth 401(k) works in reverse. You pay the taxes up front, and then never have to cut a check to Washington again. This option makes sense for those in a lower tax bracket then they imagine they’ll be in when they start taking money out of their retirement account, typically decades in the future.

Source link

We will be happy to hear your thoughts

Leave a reply

Best & Lowest Rates of all online shopping Products
Compare items
  • Total (0)
Shopping cart