What is a 401k?



A 401k is a retirement savings plan sponsored by an employer. It’s a tax-deferred savings account, which means you can contribute pre-tax dollars and all of the earnings are tax-deferred. This is one of the big advantages of a 401k.

The contribution limit for a 401k for 2020 is $19,500. If you’re 50 years old or older, you can make an additional “catch-up” contribution of $6,500, for a total contribution limit of $26,000.

401ks have become the most popular retirement savings plan in the US, probably because they’re a great way to save for retirement. Employers often offer 401ks as a benefit to their employees, and they may even offer a matching contribution.

If you have a 401k, you should contribute as much as you can to take advantage of this great retirement savings tool.



When can I withdraw money from my 401k?

Assuming you have a 401(k) through your employer, you are typically able to withdraw funds from your account once you ...

How do I manage my 401k?

Almost everyone who has a 401k has questions about managing it. Here are a few tips on how to manage your 401k: 1. K...

What is a vesting schedule?

A vesting schedule is a plan for when an employee will earn full ownership of their stock options or company shares. T...

What happens to my 401k when I leave my job?

When you leave your job, you have a few options for what to do with your 401k. You can cash it out, leave it with your...

What are some common mistakes people make with their 401k?

There are a few common mistakes that people make when it comes to their 401k. The first mistake is not contributing en...

What is a SEP IRA?

Are you looking to start your own business, or be more involved in running the one you’re already a part of? If so, ...

How much will my employer match?

When it comes to employer matching contributions, the most important thing to know is that not all employers offer thi...

How do I know how my 401k is performing?

A 401k is a retirement savings plan sponsored by an employer. It’s named after the section of the Internal Revenue C...

Can I change my 401k investment choices?

As you mature and your career progresses, you’ll likely want to change your 401k investment choices. Perhaps you bec...

What is a 401k rollover?

A 401k rollover is a process by which an individual with an existing 401k account can roll over their Balance into a n...

How do I start a 401k?

A 401k is a retirement savings plan sponsored by an employer. It’s a great way to save for retirement because it off...

What is a target date fund?

A target date fund is a mutual fund that automatically rebalances its asset allocation to become more conservative as ...

What is a defined benefit plan?

A defined benefit plan is a type of retirement plan where an employer promises a certain level of benefits to employee...

What is a 401k?

A 401k is a retirement savings plan sponsored by an employer. It’s a tax-deferred savings account, which means you c...

How do I compare different 401k plans?

When it comes to your retirement savings, your 401k plan is one of the most important factors. So how do you compare d...

How do I convert my traditional 401k to a Roth 401k?

When you leave your job, you have a few options for what to do with your 401(k). You can cash it out, leave it with yo...

What happens to my 401k if I die?

When you die, your 401k plan generally becomes the property of your designated beneficiary. What happens to the money ...

What is a 457 plan?

A 457 plan is a retirement savings plan that is sponsored by an employer. It is similar to a 401(k) plan, but there ar...

What are the tax consequences of withdrawing money from my 401k?

When you withdraw money from your 401k, you will have to pay taxes on the amount that you withdraw. The amount that yo...

Can I name a beneficiary for my 401k?

When it comes to your 401k, you may be wondering if you can name a beneficiary. The answer is yes, you can! Here’s w...