401K Retirement Investments

401K retirement investments may be the key to your future. While retirement itself is an exciting prospect in any working person’s life, preparing for that retirement is tricky. And in fact, it can be downright stressful. But with a 401K retirement plan or a 401K to IRA rollover, you’ll be plenty prepared for your retirement. With a 401K retirement investment, you can live the comfortable life you’ve always wanted and truly be able to live through your retirement to the fullest -- but only if you plan ahead and make contributions starting at the right age. With that said, you may have a lot of questions, as 401K investments can be quite complicated. If you are ready to start preparing for your retirement, read on to learn more by checking out these frequently asked questions.

Frequently Asked Questions ( 9 )   Add a Question

  1. What is a 401K?
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    A 401K is an employee-sponsored retirement investment savings plan. With 401K investments, employees can save and invest a portion of their paycheck before taxes are even taken out of their paycheck. This invested money continues to grow, giving you more money going into retirement.

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  2. What investment administrators are there?
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    There are a number of different investment administrators and the one for your plan will depend on what your employer chooses. Some examples of administrators include Fidelity Investments and Nationwide. These administrators will be looking over your investments and can help advise you of future moves, such as whether to do a 401k rollover. You'll eventually have access to your account to see how your investments are going.

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  3. How much should I personally invest?
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    Investing in your 401K is extremely important. After all, you'll need to pay off your debts, pay bills, as well as feed and cloth yourself in retirement, It all adds up, and you want to make sure you have enough. Generally, it is suggested that you put in as much as possible, and at the very least, you should match the amount that your employer is contributing. Moving that money into a traditional or Roth IRA after leaving your job is a great way to keep saving for retirement.

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  4. Do I get any say in my investments?
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    One of the best parts about 401K investments is that you get to control how your money is invested. Many 401Ks feature a spread of mutual funds, made up of bonds, stocks and money-market investments, but target-date funds are another popular option. However, you may not be able to gain access to your employer's contributions right away, meaning it may take years of working for a company before you'll be able to see payments made to your plan.

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  5. Will I be taxed on money I withdraw during retirement?
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    You will be taxed on money you withdraw, even after retirement. However, since you will be retired, you'll likely be in a lower tax bracket, which means you won't be paying as much as in taxes as you would be if you didn't put anything into your 401K. You may have different tax obligations later if you do a 401k rollover. In the end, though you'll be keeping more of your money.

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  6. Are my investments safe?
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    If the company you work for should go out of business, you can sleep well knowing your investments will be safe. Should the company go under, your 401K will be terminated, but you can do a 401K to IRA rollover and continue saving. If you withdraw instead, you'll still have to pay a penalty and income tax.

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  7. How much should I personally invest?
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    Investing in your 401K u=is extremely important. After all, you'll need to pay off your debts, pay bills, as well as feed and cloth yourself in retirement, It all adds up, and you want to make sure you have enough. Generally, it is suggested that you put in as much as possible, and at the very least, you should match the amount that your employer is contributing.

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  8. Am I still paying taxes on the money I invest?
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    As mentioned earlier, 401K investment contributions are made before taxes. Instead of being taxed on the full amount of money you made during the year, you'll only be taxed on the amount that you didn't invest. So if you were to make $60,000 a year and you invested $10,000, you'll only be taxed on $50,000.

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  9. Can I withdraw from my investements early?
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    It is not advisable to take from your 401K investments before retirement, and in fact, there are penalties for doing so. Should you take money from your 401K you will be taxed on that withdrawal as if it were income. Additionally, individuals younger than 59 and 1/2 years of age will receive an early withdrawal penalty of up to 10%. Furthermore, 20% of your account will be held by the employer to pre-pay taxes you'll owe. All of these penalties are designed to discourage individuals from withdrawing early and to prevent individuals from trying to avoid paying taxes.

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