#SaturdaySchool #Employer401k
If you have access to an Employer 401(k) and you are not taking advantage of the full employer match ... then you really should reconsider. When contributing to the 401(k) makes your paycheck after taxes smaller ... I get how it can seem counterintuitive. But, by getting the full match first you are not only paying yourself first but getting a pay raise from your boss in the process.
WHO should use an Employer 401(k):
- If you have an employer match this should be the first bucket to put your money into retirement savings
- If you don't have a match then consider a Roth IRA instead as these don't have monthly fees and greater control over investments
- If you are a high income earner and max your 401(k) consider - After Tax Contributions w/ immediate Roth Conversions (not everyone has access to this through their work fund)
WHAT is a 401(k):
- A tax advantage plan through employer that can come in Traditional or Roth format
- Investment selection is often limited to what the employer has access to
WHERE can I find a 401(k):
- Talk to your Human Resources person at your place of work
WHEN should I invest in a 401(k):
- Before you tie up your money in a 401(k) be sure to budget and set aside an emergency fund first
- Only then, start to slowly increase contributions until you max the employer match - after this then next bucket you should do is a Roth IRA before coming back to 401(k) to max out
WHY should I invest in a 401(k):
- An employer match is essentially a pay raise waiting for you to take it
- Roth 401(k) - nice, larger bucket of Roth money to grow tax free and have to withdraw tax free later
- Traditional 401(k) - helps reduce taxable income by using Pre-Tax contributions to grow tax free, but taxable income at withdrawal time
HOW do I start in a 401(k):
- Talk to you HR person and if you own your own business consider looking into SEP IRA or Simple IRA
Resource: For extra details watch the video - https://www.youtube.com/watch?v=_xTkPW3eusM
P.S.: Thank you for taking the time on your weekend to come visit my post and read it. It brings me joy knowing that you are allowing me to help you on your journey to financial independence.
#TaxEfficiency #RetirementSavings #TaxTail #TheMoreYouKnow #GrowthNotGreed
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