Finding the right 401k retirement plan
A 401k plan is one of the most preferred tools for retirement planning. It is a qualified employer-sponsored plan where a certain amount for the eligible employees is contributed toward their 401k accounts and is a part of their salaries. The employer may match up this contribution and in some cases, even choose to contribute more.
However, there are different options available for saving for your future and having a conducive 401k retirement planner is crucial for you.
Traditional 401k plan
The earnings from this plan are tax deferred and the options for investment are provided by the employer. This is the type of plan in which the employer may match the contribution of the employee. It is the most common of the 401k retirement plans.
Self-directed 401k plan
Approved by the IRS, this plan has similar rules to the other 401k retirement plans on this list. It provides you the flexibility to invest in any eligible option and basically, you are the master of your retirement savings with similar advantages as that of a traditional 401k.
Safe harbor 401k plan
This plan is mostly preferred by business owners since it helps them pass the non-discrimination test completely. In most 401k plans, the higher-earning members get maxed out contributions, but with this plan, the employer is supposed to contribute a uniform amount of percentage to each employee’s account, irrespective of their salary.
Tiered profit-sharing 401k plan
This plan is for employers who are looking for another way to make contributions with tax deductions. It allows the employer to make more contributions to a certain group as opposed to all the employees. This may help the employer to contribute toward the retirement of particular employees on the basis of their contributions to the company. Some companies also offer safe harbor sharing with tiered profit-sharing plans, ensuring your contributions go to all the worthy employees who are important to your company.
Roth 401k plan
Another common option to include in your 401k retirement planner, a Roth 401k plan is an employer-sponsored option. However, the tax deferrals are made with after-tax dollars and not with the primary earnings on an investment.
With the plan that suits you the most, you may draw out a 401k retirement planner and have enough savings for your future.
