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LEARN MORE ABOUT: 401k Plans

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A 401k is a retirement savings plan that is offered by many employers. It allows employees to save a portion of their salary before taxes are taken out. This money is invested in mutual funds, stocks, bonds, and other investments, and can grow over time. The money in a 401k is tax-deferred, meaning that you don’t pay taxes on it until you withdraw it.

The amount that you can contribute to a 401k is limited by the Internal Revenue Service (IRS). For 2020, the maximum contribution is $19,500 for those under age 50, and $26,000 for those over 50. Employers may also offer matching contributions, which can be a great way to maximize your savings.

When you invest in a 401k, you can choose from a variety of investment options. These include stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Each of these investments has its own risks and rewards, so it’s important to understand the differences before you make any decisions.

When you reach retirement age, you can begin to withdraw money from your 401k. The IRS requires that you begin taking required minimum distributions (RMDs) at age 72. These are mandatory withdrawals that you must take each year, and they are based on your age and the amount of money in your 401k.

In addition to the money in your 401k, you may also want to consider investing in other retirement savings vehicles, such as an IRA or life insurance. These can provide additional income in retirement, and can help you reach your retirement goals.

No matter what you decide to do, it’s important to understand the risks associated with investing, and to make sure that you’re comfortable with the level of risk that you’re taking on. Investing in a 401k can be a great way to save for retirement, but it’s important to understand the details before you get started.