Review:
401(k) Retirement Plan
overall review score: 4.5
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score is between 0 and 5
A 401(k) retirement plan is a type of retirement savings account offered by employers to their employees. It allows individuals to save for retirement by contributing a portion of their salary into the account on a pre-tax basis.
Key Features
- Employer-sponsored retirement savings account
- Contributions made on a pre-tax basis
- Potential for employer matching contributions
- Investment options available
- Tax-deferred growth of savings
- Portability if changing jobs
- Option to borrow funds in case of financial hardship
Pros
- Allows individuals to save for retirement with pre-tax dollars
- Potential for employer matching contributions increases savings
- Offers a variety of investment options for personalization
- Tax-deferred growth of savings can result in significant earnings over time
- Portability feature allows for seamless transition between jobs
- Option to borrow funds can provide financial relief in case of emergencies
Cons
- Early withdrawal penalties and taxes may apply if funds are withdrawn before retirement age
- Limited contribution amount per year
- Investment options may be limited
- Employer matching contributions may have vesting period before becoming fully owned by employee