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Under section 401(K) of the Internal Revenue Code, a deferred compensation plan set up by an employer so that employees can set aside money for retirement on a pre-tax basis. Employers may match a percentage of the amount that employees contribute to the plan. Contributions by both employees and employers, as well as investment earnings and interest, are not taxed until the employee withdraws the money; if the employee withdraws the money before retirement age, he or she pays an early withdrawal penalty tax. Currently, employees are allowed to annually contribute up to 15 percent of their salary but no more than $11,000 ($12,000 for people 50 or older). Many employers now offer these deferred compensation plans in lieu of or in addition to pensions.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
References in periodicals archive ?
A Solo 401(k) also enables you to choose the investments that are right for you unlike a corporate 401 (k) plan in which you are typically limited to the investment choices offered by that particular plan.
ALLOWABLE ROLLOVERS FROM ROTH 401 (K)S Direct rollover (trustee-to-trustee All or any part of the plan transfer) balance can go to another Roth 401(k), Roth 403(b), or to a Roth IRA, if the receiving plan allows.
"EastWest, a tenant at 401 Fifth Avenue for seven years, desired to stay at its current location but realized that in order to meet its current space requirements, it would need to canvas the market," said Kesseler, who was able to bring the tenant and ownership together to discuss possible options.
401 Franklin is the first phase in a total renovation of a 300,000 sq.
Modern Telecommunications, Inc., currently housed in a number of Manhattan locations, will expand its offices on the top four floors of 401 Fifth Avenue.
BiSys is one of a handful of providers offering 401 (k) plans for single participants; others include Pioneer, AIM, Scudder, BSW Benefit Plans Plus and Waddell & Reed (see resource list on page 52).
However, with a cash-balance plan, the company controls the trust-fund investments and assumes the investment risks and rewards for these funds which, of course, is not the case with a 401 (k).
401(k) plan as Roth contributions, see News Notes, Laffie, "Roth 401 (k)s," TTA, March 2006, p.
In our survey of 401 (k) plan providers, Financial Executive asked respondents if they believed there should be limits on the amount of employer stock in any employee's portfolio.
Information: Gordon Research Conferences, PO Box 984, West Kingston, RI 02892-0984 USA, 401-783-4011, fax: 401 783 7644, e-mail: grc@grcmail.grc.uri.edu, Internet: http://www.grc.uri.edu
Adding a loan feature to your 401 (k) can perk up participation in a hurry, but you need to know your way around ERISA and how to minimize the extra administrative costs.