What to Prepare to Retire in the United States-401(k) Workplace Retirement Pension Plan

401(k)-Workplace Retirement Pension Plan

401(k) means that Go Yong-ju creates an investment or saving account for employees
A retirement plan account that has tax benefits on top of it that accumulates a portion of your salary.

If it’s an advantage for both the employer and the employee,
This is where tax benefits are given.

The good thing for an employee is that the employer has to make an extra deposit as much as he puts in his account.
Therefore, it can be seen as an annual salary other than the annual salary for employees.

However, this does not apply to all companies that provide 401(k) and may vary depending on the situation.

Deposits can be made up to $19,000 per year in 2019 for individuals (up to $24,000 for over 50 years old)

The type of 401(k)

It is divided into Traditional 401(k) and Roth 401(k).

-Traditional 401(k):

It is a 401(k) plan that we commonly know,
The advantage is that you can save taxes right now.

However, tax is attached when searching, and withdrawals are possible after the age of 59.5.
You can withdraw money before the age of 59.5, but you will be charged an additional 10% tax and fine.
However, if the plan permits, you can borrow part of it.
Usually this applies to less than 50% of the total or less than $50,000, whichever is less.

After the age of 70.5, except in special cases
There are regulations requiring unconditional withdrawal according to the RMD (Required Minimum Distribution) regulations.

-Roth 401(k):

It is a plan with no tax credit right now.
However, the advantage is that there is no tax when you find it later.
Unlike traditional, withdrawals are possible 5 years after opening an account,
There is also no upward age requirement to withdraw.

-Vesting Period to watch out for

The 401(k) accumulated by the company is said to be an employee only after a certain period of time.
In some cases, there is a vesting period.
In this case, it is important to note that if you leave the company within the specified period, you must return the money accumulated by the company.

After leaving the company, either leave the 401(k) on the previous company plan or
You can move to a new job or personal account IRA for management.

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