Frequently Asked Questions
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Benefits To Participation
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Glossary
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BENEFITS TO PARTICIPATION
You get a double tax break.
With a 401(k) plan, there
are two tax advantages that can help your retirement savings grow
faster: Your contributions to the Plan are made before-tax,
so your current taxes are reduced; and your money can grow faster
because your investment earnings grow tax-deferred. You won't
pay taxes on your money until you begin making withdrawals.
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Your current taxes are reduced.
Contributions you make
to the 401(k) plan are made before-tax. If you earn
$30,000 a year you would ordinarily pay tax on all $30,000. But
when you make contributions to the 401(k) plan, they are deducted
from your pay before it is taxed. In fact, 401(k) contributions
never even show up on your W-2 as taxable income!
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Tax deferral helps your money grow.
Once your money is invested
in the plan, it can grow untaxed until you make withdrawals. Over
the years, this tax-deferred compounding can really add up.
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Company matching adds to your contributions.
401(k) plans provide you
with both an incentive and a reward for saving. Not only do you
get the advantage of tax deferral both on the contributions you
make to the plan and on the interest your contributions earn, but
your contributions are also matched by Fitch & Mather. Your contributions
will be matched $0.50 for each $1.00 you contribute up to a 5% contribution rate
- that's like getting an automatic
50% return on your money! The maximum matching contribution is
2.% of pay.
Copyright © 1999 Microsoft Corp. and/or its suppliers
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