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One of the things I regretted not knowing noong na-uumpisa pa lang akong magtrabaho sa America was the fact that I did not immediately take advantage of signing up for 401(k) even if my employer was offering it my first day of employment.
Hindi ko alam noon na sa 401(k) plan pala, makakapag-save ako for retirement while deferring income taxes on the saved money and earnings until withdrawal.
A friend of mine and a kababayan from Vallejo, Calif. who's a 401(k) proponent has more information and advice for 401(k) newbies. He's a bit shy so he prefers not to be named but he gives helpful information about this matter. Here's what he says:
"401(k) is an employer-sponsored retirement plan. Most instances, an employee contributes a certain percentage of pre-tax salary to the plan where the employer may or may not match up to a certain percentage.
It can be a tax shelter. If the employer matches the contribution, you should sign up up to the percentage that your employer will match it.
However, if you have high-balance, high interest credit card debt, you might be better off paying that first.
Check out this link for more info about 401(k)."
Additional info: After enrolling, you will periodically receive a statement of your 401(k) account. It's quite a thrill seeing how much it grows as time goes by, and you might be tempted to borrow from your 401(k) account but you should read this warning before you even think of doing so.
According to msn.com: "Taking money out of a 401(k) savings plan before you're 59 1/2 [the age set by the government for withdrawal in order not to incur penalties] is one of the biggest financial mistakes you can make. It's not just the present value of the money that you're losing, but the value of the future money that it would grow into if left alone."
(If you have a question for ASK A KABABAYAN, please e-mail yourkababayan@gmail.com. To get a more detailed information, please contact a professional.)
Hindi ko alam noon na sa 401(k) plan pala, makakapag-save ako for retirement while deferring income taxes on the saved money and earnings until withdrawal.
A friend of mine and a kababayan from Vallejo, Calif. who's a 401(k) proponent has more information and advice for 401(k) newbies. He's a bit shy so he prefers not to be named but he gives helpful information about this matter. Here's what he says:
"401(k) is an employer-sponsored retirement plan. Most instances, an employee contributes a certain percentage of pre-tax salary to the plan where the employer may or may not match up to a certain percentage.
It can be a tax shelter. If the employer matches the contribution, you should sign up up to the percentage that your employer will match it.
However, if you have high-balance, high interest credit card debt, you might be better off paying that first.
Check out this link for more info about 401(k)."
Additional info: After enrolling, you will periodically receive a statement of your 401(k) account. It's quite a thrill seeing how much it grows as time goes by, and you might be tempted to borrow from your 401(k) account but you should read this warning before you even think of doing so.
According to msn.com: "Taking money out of a 401(k) savings plan before you're 59 1/2 [the age set by the government for withdrawal in order not to incur penalties] is one of the biggest financial mistakes you can make. It's not just the present value of the money that you're losing, but the value of the future money that it would grow into if left alone."
(If you have a question for ASK A KABABAYAN, please e-mail yourkababayan@gmail.com. To get a more detailed information, please contact a professional.)
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