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I’m 59, plan to retire in late-2025. I want to boost my 401(k) contributions from 25% to 65% of my paycheck — but I worry my employer will figure out my retirement plans.
You can put it to work through passive income streams, contribute to growing a retirement fund or pay down high-interest debt. See our guide to the five smartest moves to make with your $10,000 .
In a traditional 401(k) plan, introduced by Congress in 1978, employees contribute pre-tax earnings to their retirement plan, also called "elective deferrals".That is, an employee's elective deferral funds are set aside by the employer in a special account where the funds are allowed to be invested in various options made available in the plan.
Once you set up your retirement plan at work, the next natural question is: How much to contribute to a 401(k)?
This includes making a "safe harbor" employer contribution to employees' accounts. Safe harbor contributions can take the form of a match (generally totaling 4% of pay) or a non-elective profit sharing (totaling 3% of pay). Safe harbor 401(k) contributions must be 100% vested at all times with immediate eligibility for employees.
Employer matches vary from company to company. The general contribution from an employer is usually 3% to 6% of an employee's pay. [7] A Roth retirement account allows employees to contribute after taxes, with the benefits being withdrawn tax-free in retirement.
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