Sample Essay
The 401k programs are very simple and seek to benefit the employee to manage future investments for their old age at the retirement stage. Under the 401k plans the employees of corporations can deposit their savings and funds while not having to pay any income taxes on their savings. The income tax on the funds accumulated under the 401k plans is instead taxed at the time of the withdrawal only. This is a compelling reason to participate in the 401k programs provided by the corporations as other investments made through the mutual fund, and savings accounts are taxed on a yearly basis which can reduce the overall volume of the savings. Under the 401k plans the employees have the option of selecting a portion of their monthly wages that is put aside in an account with the company which is incremented through compounded interest and also when the next saving is made by the employee.
Additionally the 401k plan is also very convince and hassle free for the employee. Arrangements can be made such that a portion of the salary of the employee can be automatically differed to the 401k programs, where the employee provides his/ her consent. The unique aspect about this retirement savings plan is that it provides the employees with a variety of options to invest their saving/ funds. The varieties of investment options that are provided by the 401k plans include options like mutual funds, stocks, and capital market investments as well as the bonds. In addition to this the 401k plans also provide the employees of a company with the facility of alternating their investment options at any time which means that the employee can re-allocate their funds between bonds, mutual funds, and capital market investments as per their choice.
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