Compound and Grow Your Employer Matching Retirement Plan Barre VT
Milne Financial Planning, Inc.
Retirement Planning & Distribution Rules, Middle Income Client Needs, Ongoing Investment Management, Socially Responsible Investments, Investment Advice without Ongoing Management, Divorce Planning
NAPFA Registered Financial Advisor, BS, CDFA, CFP®, MBA
Lee A White & Associates
Zenith Marketing Group, Inc.
Areas of Specialization
Asset Allocation, Business Succession Planning, Charitable Giving, Employee and Employer Plan Benefits, Estate Planning, Insurance Planning, Investment Management
Randolph Center, VT
Farrow Financial Inc
Drive Up Hours
J. Cole Financial Advisers, Inc.
Ongoing Investment Management, Financial Issues Between Generations, Socially Responsible Investments, Helping Clients Identify & Achieve Goals, Hourly Financial Planning Services, Charitable Giving - Trusts & Foundations
NAPFA Registered Financial Advisor, BS, CFP®
Community Financial Services Group, LLC
Areas of Specialization
Asset Allocation, Comprehensive Financial Planning, Education Planning, Employee and Employer Plan Benefits, Estate Planning, General Financial Planning, Investment Management
Average Net Worth: $500,001 - $1,000,000
Average Income: $100,001 - $250,000
Profession: Not Applicable
Granite Financial Group
Black Diamond Financial Planning, LLC
Drive Up Hours
Compound and Grow Your Employer Matching Retirement Plan
|Saving for Retirement: Compound and Grow Your Employer Matching Retirement Plan |
By James Lange
Jun 13, 2007, 16:20
If your employer offers a matching contribution to your retirement plan, the cardinal rule is: contribute whatever the employer is willing to match even if it is only a percentage of your contribution and not a dollar for dollar match.
Imagine depositing $1,000 of your money into the bank, but instead of getting a crummy toaster, you receive an extra $1,000 to go along with your deposit. To add to the fun, imagine getting a tax deduction for your deposit and not having to pay tax on your gift. Furthermore, both your $1,000 and the gift $1,000 grow (it is to be hoped), and you don t have to pay income tax on the interest, dividends, capital gains, or the appreciation until you withdraw the money. When you withdraw the money, you will have to pay taxes, but you will have gained interest, dividends, and appreciation in the meantime. That is what employer matching contributions to retirement plans are all about. If the employer matches the employee contribution, it offers a 100% return on the investment in one day (assuming no early withdrawal penalties apply and the matched funds are fully vested).
Over the years, I have heard hundreds of excuses for not taking advantage of an employer-matching plan. All those reasons can be summarized in two words: ignorance and neglect. If you didn t know that before, you know now. If you are not currently taking advantage of your employer-matching plan, run don t walk to your plan administrator and begin the paperwork to take advantage of the employer match. Matching contributions are most commonly found within Section 401k, 403b, and 457 plans. Even if your employer is only willing to make a partial match up to a cap, you should still take advantage of this opportunity. A fairly common agreement is that the employer will contribute 50 cents for every dollar up to the first 6 percent of salary you contribute. Don t grouse that it is not enough or not worth it. You have everything to gain this is free money that will compound and grow and as Einstein said, The most powerful force in the universe is compound interest.
As one of the country s top IRA experts, James Lange has developed tax-savvy retirement and estate plans for over 1400 U.S. citizens with appreciable assets in their IRAs and 401(k) plans. In his book, ...