Many U.S. workers participate in a defined contribution plan, such as a 401(k). Because each plan is unique, find out the details of your company's plan and your options. Here are five questions you should ask about your company's 澳洲幸运5官方开奖结果体彩网:401(k) plan.

1. Does the Company Match My Contributions?

A company match can significantly increase the value of your retirement account. Employers typically match a percentage of your contribution. If you make $50,000 a year, contribute 5% of your salary ($2,500), and your company matches 50% of your contribution, this adds $1,250 to your account. The employer contribution may be limited by the plan or your annual contribution limit set by the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS). In 2023, the IRS contribution limit for employees who participate in a 401(k) plan is $22,500.

2. What Are My Investment Options?

Plans usually allow you to choose from investments, such as mutual funds, stocks, bonds, and guaranteed investment contracts (GICs). Your human resourcꦍes🍸 team will likely provide this information upon enrollment.

If you don’t like the investment options offered by your employer, you may be able to transfer a percentage of your plan into another retirement account as a partial rollover. The 401(k) may also have a self-directed, full brokerage option where you can mix individual stocks, bonds, mutual funds, and ETFs, and you are not limited to a small group of funds.

3. Which Investment Option Has the Lowest Expe🅺n🐽se Ratio?

Many investments, including mutual funds and exchange-traded funds (ETFs), charge shareholders an 澳洲幸运5官方开奖结果体彩网:expense ratio to cover the fund’s total annual 澳洲幸运5官方开奖结果体彩网:operating expenses. Expressed as a percentage of a fund’s average net assets, the expense ratio includes administrative, compliance, distribution, management, marketing, shareholder services, record-keeping fees, and other operational costs. The expense ratio directly reduces shareholder returns, lowering the value of your investment, so review the prospectus of the investment options you choose.

4. When Do I Become Vested?

The vested portion of your 401(k) is the part that is yours to keep, even if you leave your job. Any money that you contribute is always 100% vested. Contributions made by your company will be sub♊ject to a vesting requirement. There are two types of vesting schedules: graded and cliff.

With graded vesting, funds vest over time. You may be 25% vested after your first year, 50% vested the next year, and so forth until you are fully vested. With 澳洲幸运5官方开奖结果体彩网:cliff vesting, the employer contribution is 0% vested until you have been on the job for a specified amount of time, at which point it becomes 100% vested.

5. When Can I Withdraw My Money?

In general, if you make a withdrawal before you are age 59½, you have to pay a 10% penalty tax as well as income taxes on the distribution. In cases of hardship, you may not have to pay th♛e penalty. These hardship exemptions can include:

• Suffering a disability
• Death where the distribution is made to a beneficiary
• Certain medical expenses
• Buying your first home
• Paying for college for yourself or a family member
• Avoiding 澳洲幸运5官方开奖结果体彩网:foreclosure or eviction
• Burial or funeral expenses
• Certain home repairs
• Adopting a child

As of 2023, you need to take the 澳洲幸运5官方开奖结果体彩网:requ🌞ired minimum distribu🔜tions (RMDs) from all of your 401(k)s at age 73 except for a plan offered by a company you're still working for. In general, you start withdrawing money by April 1 of the year following the year you turn 73.

The Bottom Line

澳洲幸运5官方开奖结果体彩网:Choosing a 401(k) plan can be overwhelming. Many workers are eligible to participate in this employer-sponsored retirement plan but delay or even avoid signing up. Understanding these five questions will help clarify the plan's details and your options. If the information you receive from your employer is unclear, ask your 澳洲幸运5官方开奖结果体彩网:human resourc🍨es or benefits coordi🦂nator to answeꩲr any questions about your company's 401(k) plan.