| Everybody starts working with one clear goal in | | | | Once the plan is chosen and the percentage of |
| mind. This is to make enough money to not have | | | | wage deduction is established, a person can build |
| to work anymore. Over a lifetime of work, | | | | up equity in their retirement packages. The |
| people have the opportunity to take a percentage | | | | package itself can serve as a form of collateral |
| out of every paycheck to be put aside for | | | | on business, home, car, or personal loans and |
| retirement. These types of plans are called the | | | | hence can be borrowed against. It is never |
| 401k retirement package. However, what is the | | | | advisable to put your retirement account at risk, |
| basic structure of a 401k plan? | | | | but life will often throw some interesting twists |
| To begin, the first piece of information that can | | | | that will leave us no other choice. |
| be highlighted is that a 401k plan takes a | | | | We briefly mentioned the "catch up" clause, but |
| prearranged percentage of a person's weekly, | | | | let's look at that a little closer. This feature is in |
| biweekly, or monthly paychecks. This deduction | | | | place so that older people who are close to |
| from wages is brought on by the employee and | | | | retirement can have a little extra security when |
| not the company and can be set by the worker | | | | approaching their retirement. This is especially |
| themselves. Each company is different, so it is | | | | good for people who have borrowed against their |
| important to read over all literature provided to | | | | plan in the past or have not paid much into it due |
| decide the best plan and percentage of deduction. | | | | to past bills. |
| While it is a great idea to save as much as | | | | What is the basic structure of a 401k plan is it is |
| possible, there are laws on the books to prevent | | | | a retirement benefits package that company |
| someone from abusing this system. Inherently, if | | | | employees pay into that may or may not have a |
| a person takes too much money out to save for | | | | company match involved with it. There are limits |
| retirement, the company will have to pay them | | | | to how much a person can invest in their |
| more on the dollar for dollar basis. To date, a | | | | retirement with strictly a 401k plan that are |
| person is only allowed to save up to $16,500 a | | | | adjusted by an employee's age. By taking |
| year if under the age of 50. There is a "catch up" | | | | advantage of the match feature and making a |
| contribution that is allowed after this allowing for a | | | | maximum contribution, a person can have quite |
| total of $22,000 to be contributed by the | | | | the next egg by the time they retire. |
| employee.. | | | | |