Looking for a 401(K) Plan?Can’t Decide What To Choose? Read Below

Posted by Life Inc. Retirement Services on February 28th, 2020

What is a 401(K) Plan?

A 401(K) plan is a retirement benefits account offered by employers to employees for tax benefits and retirement purposes. It is named 401(K) because of the U.S Internal Revenue Code’s section defining it.

The 401(K) plan is one of the most widely used retirement vehicles. 401(K) plans are established by employers to help employees understand their retirement goals, it is considered to be a classified plan hence offering tax benefits. The 401(K) plans can differentiate into two broad categories–

1. Traditional 401(K) Plan - In a 401(K) plan you can make contributions from your employment earnings, these contributions can be made before or after payroll taxes. Once the contributions are in the account the profits made from investing these funds grow on a tax-deferred basis, which means if you make pre-tax contributions from your earnings you won’t pay taxes on your gains until you withdraw them at your retirement, and upon withdrawal of it, you are likely to pay lower taxes as because at your retirement you will be in a lower tax bracket.

2. Roth 401(K) Plan - Some 401(K) plans allow you to make post-tax contributions which means no tax upon withdrawal of funds at your retirement. But there is a condition of holding the money in the account for a minimum number of years before withdrawing it after your retirement, these timelines and conditions are defined under U.S internal revenue code and may change.

Selecting the best 401(K) can be a tough job while being occupied in many other chores of life, hence we are here to help you make the better decision, we are the best in category 401 k plan providers, also being the most effective low cost 401K providers.

401K can also be used by small businesses to help generate a decent retirement corpus while saving taxes likewise the individual 401(K) plans, Small businesses such as small corporations, partnerships, etc having employees other than owner and spouse can also set-up a SMALL BUSINESS 401(K) PLAN. Here again, selecting the right plan that offer best of the benefits is a task best left for experts,Wherein arises the role of small business 401k plan providers, who can help you establish your desired 401(K) plans as per your needs and desires, but there is some limitation mentioned for such plan which one shall consider and maintain while establishing such account.

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