Answers to 5 Burning 401(k) Questions

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401k question

I want to know the "Honest" truth about why an employer pressure an employee to start a 401k.I remember a company I worked for was always struggling for money, ask me to start a 401k with them. I decided not to do it. I was called into the office about "why not". They gave me an extra $200 a month to put it in the 401k. Other companies I worked for pressure me to up my % , and they didn't match. So what are the hidden perks that a company gets for employee money. Is it a big tax write off ,maybe they can "borrow" the funds for payroll. There has to be something there for them to pressure us into this.

dave

dave of CT @ Mar 10, 2009 10:47:40 AM

ROTH - more detail

Direct contributions to a Roth IRA may be withdrawn tax free at any time. Rollover, converted (before age 59½) contributions held in a Roth IRA may be withdrawn tax and penalty free after the "seasoning" period (currently 5 years). Earnings may be withdrawn tax and penalty free after the seasoning period and age 59½ (or other qualifying event). All withdrawals from a traditional IRA are taxed as Ordinary Income, and a penalty applies for withdrawals before age 59½. In contrast, capital gains on stocks or other securities held in a regular taxable account for at least a year would be taxed at the lower long-term capital gain rate, which is currently 15%. This higher tax rate for withdrawals (and tax on the original contribution) from a traditional IRA is a quid pro quo for the deduction taken against ordinary income when putting money into the IRA.

Rebecca of GA @ Feb 19, 2009 08:54:13 AM

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great nice imformation!

Bobe of CO @ Dec 13, 2008 22:43:45 PM

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Great info. Thanks!

Sara of NV @ Dec 13, 2008 02:24:58 AM

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Great info. Thanks!

Sara of VA @ Dec 13, 2008 02:21:23 AM

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A great resource - many thanks!

Mike of CA @ Dec 13, 2008 00:33:23 AM

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A great resource - many thanks!

Gary of NM @ Nov 17, 2008 08:34:47 AM

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A great resource - many thanks!

Gary of RI @ Nov 17, 2008 08:29:29 AM

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Hi, thanks for the great information.

Berta of VA @ Nov 17, 2008 05:46:42 AM

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Hi, thanks for the great information.

Berta of KY @ Nov 17, 2008 05:41:14 AM

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New Money

Katy Marquardt, a senior editor at U.S.News & World Report, takes a contemporary look at happenings in the financial world and aims to help young investors get going with their portfolios--or just sound cool at cocktail parties. Have a question? E-mail Katy at newmoney@usnews.com

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