| A 401k account is an investment vehicle for your | | | | mutual funds, money market accounts, etc. These |
| retirement. It's almost always done with your | | | | usually vary from higher risk investments (with higher |
| employer, which has it's own list of benefits, and the | | | | return rates) to safer bet plans that will offer lower |
| accounts also have a small list of tax benefits. | | | | returns. This is a personal preference, and one you |
| They're a unique type of account that has a lot of | | | | can choose to change over the years. |
| options to pick from to build a plan that will work for | | | | Even if you're not planning on staying with the same |
| you. | | | | company until you reach retirement age (59 years |
| These types of savings plans are set up through | | | | and 6 months old) that's fine, you'll be able to |
| your employer. A portion of your paycheck is taken | | | | transfer your 401k account to one with your new |
| out (you select the percentage of your check you | | | | employer as you move from company to company |
| would like to use) and is invested in your account | | | | over the years. Withdrawing money from the |
| automatically, requiring nothing from you. | | | | account before you reach retirement, however, is |
| Most employers will match your contributions up to a | | | | not advised. You'll want to read more about this later, |
| certain percentage point. So, for instance, if you | | | | but basically there are penalties and you'll lose out on |
| invest two percent of your paycheck into this | | | | a lot of your savings if you withdraw early-this is |
| retirement account then your employer will also | | | | really for the best, however, because by leaving the |
| contribute that same amount. This is a unique form | | | | money in this protected account you'll be prepared |
| of income you won't be getting anywhere else so if | | | | for retirement. |
| you don't take advantage of that match, you're | | | | There is obviously more you'll want to know about |
| missing out. | | | | these types of retirement plans over the years but |
| Your employer will usually have a number of different | | | | now you have a basic understanding of what a 401k |
| plans for you to choose from that lay out how your | | | | account is that will get you started saving for your |
| money will be invested, in a variety of stocks, bonds, | | | | retirement today. |