What are 401a plans – What is a 401a? 1-800-566-1002 . What are the best types of 401a plans for retirement and learn how you can avoid the most common mistakes that individuals have made when looking to use their 401a plan for retirement.
The Difference Between a 401k and 401a

Trying to figure out all of the differences in retirement plans is a complicated task. It is not enough to go to a financial adviser and sign your name wherever you are instructed to do so. Educating yourself on the inner workings of retirement plans will insure that you will be able to live the quality of life you are accustomed to later on down the road.

A 401 plan, regardless of the letter afterward is a retirement plan that allows employees to save money for retirement. By contributing to a 401 plan you participate in a tax shelter, meaning that the money invested comes out of your paycheck before taxes are taken out. Therefore, your taxable income goes down while your retirement investments go up. You will pay taxes on the money when you withdraw the money during retirement. Some 401 plans are voluntary and others are mandatory.

There are several ways that employers match funds in a 401 plan. The company may add a fixed dollar or percentage amount, with or without requiring you to contribute. The employer may match a fixed percentage of the amount you the employee contribute. The employer could match your contribution within a given range (i.e. a variable employee match).

As an employee you can select different investment options, usually an assortment of mutual funds that focus on stocks, bonds, money market investments, or some combination of all of these. The company may offer their stock for you to purchase as well. You can reallocate your money in these various options at any time. Monitoring the return on these investments keeps you informed of the money you are making and saving for retirement. If a certain mutual fund continually drops, you may move the investments to a higher yield investment without any fees.

There are strict rules for how much you can contribute annually as well as penalties for withdrawing money from a 401 plan early. Find out exactly what percentage of your plan will go toward taxes and penalty fees. Generally, 20% will go toward taxes and 10% will be taken as a penalty. This can take a large chunk of your investment, leaving you with much less than you would get by waiting until retirement. The government does this to discourage people from using their retirement money for non-retirement activities.

A 401k plan is a type of 401a plan. It seems to be the general rule that 401a plans are offered by government employers and 401k plans are offered by private companies. The governing rules are very similar.

Reevaluating your investment portfolio at least annually will insure that you are keeping track of your investments. Often quarterly reports are sent out that allow you as an investor to monitor if your money is earning as much as possible for you. Knowing the details of your plan is the most powerful tool you have toward retirement.

Feel free to subscribe to our YouTube channel and receive instant access on different retirement related topics. Thanks for watching!

Related Search terms:

401a plan annuities
401a plan income
401a plan explained
401a plan reviews
401a plan review
What is the best fixed indexed 401a plan for retirement vs the top immediate income 401a plan for retirement…(read more)

LEARN MORE ABOUT: 401a Plans

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing