When you hear the word 401(k), you automatically think about retirement. Like most people, thinking about retirement might be intimidating and overwhelming because you might feel underprepared. However, when you work somewhere that offers 401(k), it is crucial to understand how it helps your future.
What is a 401(k)?
A 401(k) is an employer-sponsored retirement account that is not permanently locked or controlled by the company you are working for. It is a worthwhile investment for your future that allows you to decide how much money can be taken out of your paycheck and put toward your retirement investment. The company you are working for can either match all or a portion of what you contributed to the account. It also allows you to decide if you want to contribute a percentage of your salary toward your 401(k) or a set number that will be automatically taken out of your account.
Why is a 401(k) important?
A 401(k) is an investment for your retirement that your company is also contributing to along with you. Not only are you receiving free money because your company is investing in your retirement, but your contribution is made with pretax money since it is taken out of your paycheck before it is taxed. What makes this even better is that since it gets taken out first, it saves you money by lowering your taxable income while making it all tax-deferred. You will only be taxed if you decide to withdraw the funds from the account before you are supposed to.
Can I make changes to my 401(k)?
Two misconceptions about 401(k) plans are that people believe that the account is locked permanently and they have no control over it while the company does. However, that is far from true. With 401(k) plans, you are able to make changes to the amount you want to contribute to it when you first enroll and during each quarter. The quarters are every three months and occur on March 31, June 30, September 31, and December 31. You can cancel your 401(k) contributions at any time, even in the middle of a quarter, and take it out. However, if you try to use it before the age of 59 1/2, you will need to pay taxes and penalties. It is also important to continue increasing the percentage you want to contribute to the account as your salary increases yearly.
Does MVT offer a 401(k)?
You will be happy to find out that MVT does offer a 401(k) plan that you can sign up for as soon as you are hired. MVT wants the best for its employees and believes that its employees deserve more than a job, they deserve a career with a company that treats them with respect and genuinely cares about them. MVT currently has the 401(k) plan with John Hancock that offers assistance and tools to help navigate you toward the best retirement plan for your future.
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