401k Plan Benefits

Video Transcript

"This is financial adviser Patrick Munro talking about what is a 40l k plan. Once an individual becomes an employee and they are working with a progressive company and they pass their probationary period, usually an employer will encourage them to participate in a retirement plan at work. This plan is known as a 40l k. It really comes from tax law from Congress. This allows the employee to save money usually through payroll deduction from the plan and save that money in a tax deferred environment. The money continues to grow over time in this tax deferred environment and many times progressive employers will match the contributions because they too get benefits from the IRS in doing so. As you continue to allow this money to grow, keep in mind, never take it out before age fifty nine and a half because there are significant penalties in doing so. Then this money will grow to a point where it will actually replace the money that you had during your working life. Normally at that time you'll roll it over in to an IRA, which is an individual retirement account. And that retirement account will continue to build hopefully for your future as long as you don't take too much of it out. This is financial adviser Patrick Munro talking about the benefits of a 401 k."