The 401k became the preferred method for most (non-union) companies to help employees invest for the future. The employer really has no responsibility other than selecting a financial institution, usually a brokerage house, to manage the plan. Even though many companies have a contribution plan where they provide an additional percentage of your own contribution, there is no law saying they need to. In today's financial climate most companies either don't contribute, or they contribute very little.
There is an annual threshold of $15, 000 per person, regardless of your salary. You are able to choose the funds in which to invest your money, but of course you are limited to funds available from the brokerage house managing the 401k employee plan.
Even though the concept of a 401k is attractive, not all plans are worth the investment. Many employees choose not to participate in their company's plan because after doing some research they may find that the funds (mutual funds) have not performed well.
When you do contribute to a 401k, you are using pre-tax dollars. If you need to make an early withdrawal (before age 59) you will be penalized and taxed at your regular rate.
If you should change jobs, don't forget about your 401k. Talk to a financial adviser to "roll it over" into a new 401k at your job, or roll into a Roth IRA.
For more information visit http://www.pngfinancialgroup.com/ group.com or call 1-888-701-3222.
Article Source: http://EzineArticles.com/?expert=Jason_Pollington
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