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National 401(k) Day

National 401(k) Day

September 11, 2020
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Welcome to the Weekly SUMmary - 09/11/2020

Today is National 401(k) Day.

What is a 401(k)?

  • A Defined Contribution plan
  • Tax advantaged retirement account (the name 401(k) is used due to the tax code that allows for the adjustment of taxation related to funds in this type of account)

Why is is important to understand 401(k)s?

  • These plans can be of huge benefit to employers and employees
    • Contributions limits are much different than many other retirement account options
  • Although most only understand them at the surface level, they are quite complex in their workings
    • They involve the sponsor (employer),
    • participants (employees),
    • payroll,
    • recordkeeper (company whom the plan uses for investments),
    • often other partners such as a third party administrator (TPA),
    • and possibly auditor(s) and more
  • Many lawsuits arise from the lack of proper design (set up) and administration of these plans

This is just the tip of the iceberg when it comes to options for your or your employee's retirement plan. To learn more or if you're considering this or other alternatives, I'm available.

Resources:

https://www.investopedia.com/terms/1/401kplan.asp

Education obtained through studies utilizing the American Society of Pension Professionals & Actuaries, the American Retirement Association, and many other sources.

https://www.asppa.org/

https://www.usaretirement.org/

 

This is meant for educational purposes only.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.  (09/20)