for Retirement: Compound and Grow Your Employer Matching Retirement
If your employer
offers a matching contribution to your
retirement plan, the cardinal rule is: contribute whatever
the employer is willing to match - even if it is only a
percentage of your contribution and not a dollar for
$1,000 of your money into the bank,
but instead of getting a crummy toaster, you receive an
extra $1,000 to go along with your deposit. To add to the
fun, imagine getting a tax deduction for your deposit and
not having to pay tax on your "gift." Furthermore, both
your $1,000 and the gift $1,000 grow (it is to be hoped),
and you don't have to pay income tax on the interest,
dividends, capital gains, or the appreciation until you
withdraw the money. When you withdraw the money,
you will have to pay taxes, but you will have gained
interest, dividends, and appreciation in the meantime.
That is what employer matching contributions to
retirement plans are all about. If the employer matches
the employee contribution, it offers a 100% return on the
investment in one day (assuming no early withdrawal
penalties apply and the matched funds are fully vested).
Over the years,
I have heard hundreds of excuses for
not taking advantage of an employer-matching plan. All
those reasons can be summarized in two words: ignorance
and neglect. If you didn't know that before, you know now.
If you are not currently taking advantage of your employer-
matching plan, run-don't walk-to your plan administrator
and begin the paperwork to take advantage of the employer
match. Matching contributions are most commonly found
within Section 401k, 403b, and 457 plans. Even if your
employer is only willing to make a partial match up to a
cap, you should still take advantage of this opportunity. A
fairly common agreement is that the employer will
contribute 50 cents for every dollar up to the first 6 percent
of salary you contribute. Don't grouse that it is not enough
or not worth it. You have everything to gain-this is free
money that will compound and grow-and as Einstein said,
"The most powerful force in the universe is compound interest."
About The Author:
As one of the country's top IRA experts, James Lange,
has developed tax-savvy retirement and estate plans for
over 800 U.S. citizens with appreciable assets in their
IRAs and 401(k) plans. In his book, Retire Secure! Jim
systematically proves you can be tens of thousands
to over a million dollars richer by "paying taxes later"
and using Roth IRAs. Get the absolute maximum from
your IRA and retirement plan and avoid a host of
disastrous mistakes by going to http://www.retiresecure.com
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