If you are on a retirement savings plan the likely hood is it’s a 401K plan. But what are the little secrets joint to the plan that no ones telling you?
1. You may have access to the money before you retire
Once you’ve reached 59 ½ (for some as young as 55) you may be eligible to take an ‘in-service distribution’ from the plan while you are employed.
2. You can take a loan
If you need a loan, why not borrow from yourself?
3. You can start with a very small contribution and grow the amount overtime.
In early careers the thought of taking away from your already lower pay can be daunting. There is no rule of what % you should put aside. If taking from your salary is too much of a stretch, just lower the percentage and see how you get on.
4. Making contributions is a winners way
You retirement funds are going to be essential in your old age. Therefore getting the fund as high as possible is only going to benefit you. There are also a few little quirks to contributions as well.
· Employer match- When you make a contribution to your 401K plan often your employer will match a portion of your contributions.
· Payroll Deductions- Making contributions to your 401K plan by payroll leads to several tax benefits. As 401K plans aren’t counted in your income tax, the amount of the reduction to your pay will be less than the amount your putting into your 401K plan.
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