The Easiest Money You Will Ever Make
What if I were to offer you an investment providing a guaranteed return of 50% or more?
You put in $1.00 today.
And it instantly turns into $1.50!
Or in many situations, $2.00!
You might suspect I was up to financial chicanery, a la Bernie Madoff.
But everything I am going to discuss today is completely legitimate.
And taking full advantage of this opportunity may be the one of the most important things you can do to begin securing your financial future.
I’m writing, as some of you might suspect, about employer matching of 401(k) contributions.
The majority of Americans work at a firm that offers a 401(k)-type retirement program. And the majority of 401(k) plans offer to match employee contributions.
So if you are reading this, the odds are pretty good that you are eligible for 401(k) matching. Particularly if you work for a larger employer, with hundreds or thousands of employees.
And if you are not taking advantage of the full match you are eligible for, you are literally leaving free money on the table.
None of us can afford to do that.
There are a variety of ways that companies can match your 401(k) contributions, including a percentage of what you contribute, discretionary amounts not based on your contributions, and fixed contributions for all participants. Matching funds can be in the form of cash, company stock, or a combination of cash and stock, depending on your employer.
Let’s look at a couple examples:
Your employer offers partial 401(k) matching. We’ll assume you make $50,000 a year, and that your employer offers to match 50% of your contributions, up to 6% of your annual salary. 6% of $50,000 is $3,000. If you contribute $3,000 to your 401(k) this year, your employer will match 50% of that, adding an additional $1,500 into your account!
Many employers offer full 401(k) matching. We’ll once again assume you make $50,000 a year, but in this case your employer offers to match 100% of your contributions, up to 6% of your annual salary. 6% of $50,000 is $3,000. If you contribute $3,000 to your 401(k) this year, your employer will match 100% of that, adding an additional $3,000 into your account!
You should keep in mind that 401(k) plans are designed for retirement savings, and that you generally cannot take your elective contributions out of these accounts until you die, become disabled, or otherwise have a severance from employment; the plan terminates without replacement; or you reach age 59 ½ or incur a financial hardship. You can take a hardship withdrawal because of an immediate and heavy financial need (as defined by the IRS, of course!), but keep in mind that any distribution may have tax implications. Many distributions before the age of 59 ½ will incur an additional 10% tax.
You should also keep in mind that in most cases company matching contributions are not immediately vested. If you leave your company after, say, two years, you might only be eligible to rollover half of the funds that the company has matched in your 401(k) into another qualified retirement plan.
And you should also keep in mind that I am not a financial advisor, and am in no way responsible for your financial decisions!
That being said, if you are serious about saving for retirement, taking some time to consider contributing enough to your 401(k) to get the full company match you are eligible for should be near the top of your “to do” list. Your human resources department should be able to provide you with all the information and plan documentation you need to figure out the maximum match that you are eligible for.
And once you have that information, the rest is up to you!
Can you recommend other ways to make large and quick returns on your investment? I’m thinking by legitimate means, of course!