Business 401k Plans

Aside from the tax advantages associated with investing in retirement plans such as a 401(k) plan, too often, an individual does not consider the financial requirements they will be facing later in life.  The earlier one developes the financial disclipine of putting a portion of their weekly or monthly income aside for later in life, the stronger that “nest egg” will be when you need it most. 

All emplolyed persons employed in the United States contribut to Social Security throughout their career.  But paying into Social Security all those years of emplolyment, does not guarantee you will be able to cover living expenses from just Social Security benefits when you retire.  Social Security was initially designed as a “suplement” to your retirement savings.  The population is living longer, and your retirement savings require a discliplined program from early years to ensure you will have enough to live comfortably in later years.

 Starting a plan when you  are still in your 20’s, even though you probably won’t need it for decades, creates this discliple of saving.  If you automatically budget a specified amount - be it a monthly automatic money transfer to your 401(k) retirement plan, or you personally make a regular,  specified deposit into your 401(k) plan, the monies you depoit are not missed.  You learn early in your life to budget for the future.  This may seem strict, but this early financial disclipline helps you avoid spending unnecessairly in early years, and creating a habit of saving  towards building a secure financial future ;not only for you, but your family as well. 

As the year end nears, we seek tax saving options still available before December 31.  A 401(k) pre tax contribution to your retirement fund  provides deferred taxes on contributions and earnings until withdrawn. 

If you have already established a 401(k) plan through your employer, confirm the amount you have contributed to date this year.   You are allowed  an individual pre tax  contributation of up to $15,000 per year.  If you have not reach the maximum allowed, you still have until December 31 to contribute additional funds. (If your employer matches contributions to you fund, the maximum annual contribution,  when added to employee contributions, cannot exceed $45,000 for 2007).

If you don’t have a 401(k) plan, check with your employer.  There is still time to establish a 401(k) plan before year’s end.