401k and Retirement Funds | Employer Investment Accounts (According to Study.com)

Want to learn all about 401k and other employer-sponsored retirement accounts? Check out this video and see more on Study.com: https://bit.ly/Study401k

A 401k is a retirement plan where your employer can help you grow your savings fund by making contributions.

Here’s how they work.

If your company offers you a 401k – you can put money into this account without paying taxes on it. Don’t get too excited, you’ll have to pay taxes on the money on the back end during retirement – but by then – hopefully your tax bracket will be different.

At some companies, a big perk is that employers will match contributions to your account. And some companies require a certain amount of time before your account is considered vested. This means your contributions cannot be taken away once they are vested.

401k plans can be transferred or rolled over into another account if you change jobs.

One thing to remember, 401k accounts can grow at different rates, so there’s no guarantee of a specific amount at retirement. The value of the account will depend on how successful the savings were invested. So, if the market tanks or explodes, so can your 401k.

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