How is money paid into a 401K?
Most money that is paid into a 401K is taken out of your weekly, semi weekly or monthly paycheck before taxes are taken out. It is put into a special fund that will draw interest or be invested. You have to know how you want your money invested when you set up your retirement fund. Your employer will give you options when you first sign up. If you happen to work for yourself, you can go over setting up this type of retirement plan with a financial advisor and investor. The worst mistake you can make is not monitoring your investment and your fund. There have been cases of mismanagement by employers and advisors so it is your job to stay informed and well educated. The use of “I didn’t know” just does not adequately protect you should something go wrong.

If my employer goes bankrupt, is my 401K protected?
Unfortunately it does not mean that your 401K is protected. Take the Enron scandal as a great example. The company bigwigs did not take out insurance on their employee’s retirement plans. And as a result many people lost their life savings. The most important thing you can do prior to enrolling in a 401K offered by your company is to ensure that they have insurance that covers your money. You do not want them to close the doors and take your money with them.

What happens to my 401K if I leave my job for another?
Luckily you do have some options if you leave one company and go to another. You can always roll your 401K savings into the new company’s retirement plan or you can convert it to an IRA. You can also withdraw the money but that should be a last resort option because you will be taxed very heavily. How heavily will you be taxed? You will be hit with about 55% in taxes and fees because you cashed out early before retirement. The ideal situation is that you convert your money over into another retirement fund and do not lose any nor are you heavily taxed as a penalty.

Is there an age limit to disbursing my 401K?
There is an age limit at which disbursement must begin. The general rule of thumb is that you have to begin withdrawing from your 401K by the following April after you are 70 ?. Why the ?? It is just one of those bizarre rules that the IRS and the government has set up. There are some allowances made for people that are still working even though they have passed their retirement age. The best source of information about your particular situation can be found through your financial advisor and your human resource department.

Being a professional, Matthew McMillan only recommends the best genital warts remedies. His methods are highly recommended and information curing genital warts can be found at treatmentforgenitalwarts.com.