401K

The 401k plan was set up by the federal government as a way for people to save money for their retirement. To encourage people to open 401k accounts, the government instituted special tax benefits for those who open accounts. A 401k plan is a retirement plan set up by ones employer and allows the participant to build future wealth while working. When signing up for a 401k account, one agrees to contribute part of their salary to their account. The money is deducted from your paycheck and participants end up paying less of an income tax. The 401k plan is also very beneficial to the participant because they are not taxed on the part of their income that is contributed to their account. The point of not taxing the contributed invested money is so that the amount increases quickly. Employers usually require an employee to have 6 months or a year to qualify for a 401k account and some companies require one to be 21 years old before being eligible. That's all you need to know about a 401k account! Now get crackin'!