What is a 401(k) even?

What even is a 401(k)?

𝗔 𝟰𝟬𝟭(𝗸) 𝗶𝘀 𝗮𝗻 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗿 𝘀𝗽𝗼𝗻𝘀𝗼𝗿𝗲𝗱 𝗿𝗲𝘁𝗶𝗿𝗲𝗺𝗲𝗻𝘁 𝗽𝗹𝗮𝗻; 𝘠𝘰𝘶 𝘤𝘢𝘯 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘦 𝘶𝘱 𝘵𝘰 $19,500 𝘱𝘦𝘳 𝘺𝘦𝘢𝘳, 𝘣𝘦𝘧𝘰𝘳𝘦 𝘵𝘢𝘹, 𝘵𝘰 𝘵𝘩𝘪𝘴 𝘱𝘭𝘢𝘯 𝘰𝘳 $26,000 𝘪𝘧 𝘺𝘰𝘶 𝘢𝘳𝘦 𝘰𝘷𝘦𝘳 50. (Employer contributions are NOT included in these caps 🎉)

𝑩𝒆𝒏𝒆𝒇𝒊𝒕𝒔 𝒐𝒇 𝒄𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒏𝒈 𝒕𝒐 𝒂 401(𝒌):

1️⃣ 𝙋𝙧𝙚-𝙏𝙖𝙭

𝘛𝘩𝘪𝘴 𝘪𝘴 𝘪𝘮𝘱𝘰𝘳𝘵𝘢𝘯𝘵 𝘧𝘰𝘳 𝘵𝘸𝘰 𝘳𝘦𝘢𝘴𝘰𝘯𝘴:

1) 𝘠𝘰𝘶 𝘥𝘰 𝘯𝘰𝘵 𝘱𝘢𝘺 𝘪𝘯𝘤𝘰𝘮𝘦 𝘵𝘢𝘹𝘦𝘴 𝘰𝘯 𝘵𝘩𝘪𝘴 𝘢𝘮𝘰𝘶𝘯𝘵 𝘶𝘯𝘵𝘪𝘭 𝘺𝘰𝘶 𝘸𝘪𝘵𝘩𝘥𝘳𝘢𝘸 𝘧𝘶𝘯𝘥𝘴

2) 𝘐𝘵 𝘭𝘰𝘸𝘦𝘳𝘴 𝘺𝘰𝘶𝘳 “𝘵𝘢𝘹𝘢𝘣𝘭𝘦 𝘸𝘢𝘨𝘦𝘴”, 𝘮𝘦𝘢𝘯𝘪𝘯𝘨 𝘵𝘩𝘢𝘵, 𝘣𝘦𝘤𝘢𝘶𝘴𝘦 𝘵𝘢𝘹𝘦𝘴 𝘢𝘳𝘦 𝘢 𝘱𝘦𝘳𝘤𝘦𝘯𝘵𝘢𝘨𝘦 𝘰𝘧 𝘺𝘰𝘶𝘳 𝘸𝘢𝘨𝘦𝘴, 𝘺𝘰𝘶 𝘱𝘢𝘺 𝘓𝘌𝘚𝘚 𝘪𝘯 𝘵𝘢𝘹𝘦𝘴. 𝘐𝘯 𝘳𝘢𝘳𝘦 𝘤𝘢𝘴𝘦𝘴, 𝘵𝘩𝘪𝘴 𝘤𝘢𝘯 𝘱𝘶𝘵 𝘺𝘰𝘶 𝘪𝘯 𝘢 𝘭𝘰𝘸𝘦𝘳 𝘵𝘢𝘹 𝘣𝘳𝘢𝘤𝘬𝘦𝘵!

2️⃣ 𝘾𝙤𝙢𝙥𝙖𝙣𝙮 𝙈𝙖𝙩𝙘𝙝 FREE money!!!

𝘔𝘰𝘴𝘵 𝘤𝘰𝘮𝘱𝘢𝘯𝘪𝘦𝘴 𝘰𝘧𝘧𝘦𝘳 𝘴𝘰𝘮𝘦 𝘴𝘰𝘳𝘵 𝘰𝘧 𝘤𝘰𝘮𝘱𝘢𝘯𝘺 𝘮𝘢𝘵𝘤𝘩. 𝘛𝘩𝘦𝘴𝘦 𝘢𝘳𝘦 𝘶𝘴𝘶𝘢𝘭𝘭𝘺 𝘰𝘯𝘦 𝘰𝘧 𝘵𝘩𝘦 𝘧𝘰𝘭𝘭𝘰𝘸𝘪𝘯𝘨:

𝘿𝙤𝙡𝙡𝙖𝙧-𝙛𝙤𝙧-𝘿𝙤𝙡𝙡𝙖𝙧 - 𝘛𝘩𝘪𝘴 𝘮𝘦𝘢𝘯𝘴 𝘵𝘩𝘦𝘺 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘦 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘦 𝘶𝘱 𝘵𝘰 𝘢 𝘴𝘦𝘵 % 𝘰𝘧 𝘺𝘰𝘶𝘳 𝘴𝘢𝘭𝘢𝘳𝘺

% 𝘽𝙖𝙨𝙚𝙙 - 𝘛𝘩𝘦𝘺 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘦 𝘢 𝘱𝘦𝘳𝘤𝘦𝘯𝘵𝘢𝘨𝘦, 𝘶𝘴𝘶𝘢𝘭𝘭𝘺 50% 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘦, 𝘶𝘱 𝘵𝘰 𝘢 𝘴𝘦𝘵 %

𝙀𝙭𝙖𝙢𝙥𝙡𝙚:

𝙎𝙖𝙡𝙖𝙧𝙮 - $50𝙠

𝘾𝙤𝙢𝙥𝙖𝙣𝙮 𝙈𝙖𝙩𝙘𝙝 - 50%, 𝙪𝙥 𝙩𝙤 6% 𝙤𝙛 𝙨𝙖𝙡𝙖𝙧𝙮

𝙔𝙤𝙪𝙧 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙞𝙤𝙣 - $3,000 (6% 𝙤𝙛 𝙮𝙤𝙪𝙧 𝙨𝙖𝙡𝙖𝙧𝙮)

𝙏𝙝𝙚𝙞𝙧 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙞𝙤𝙣- $1,500 (50% 𝙤𝙛 𝙔𝙊𝙐𝙍 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙞𝙤𝙣)

*️⃣𝙑𝙚𝙨𝙩𝙞𝙣𝙜 𝙨𝙘𝙝𝙚𝙙𝙪𝙡𝙚: 𝙏𝙝𝙞𝙨 𝙞𝙨 𝙩𝙝𝙚 𝙖𝙢𝙤𝙪𝙣𝙩 𝙤𝙛 𝙩𝙝𝙚 𝙘𝙤𝙢𝙥𝙖𝙣𝙮’𝙨 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙞𝙤𝙣 𝙩𝙝𝙖𝙩 𝙮𝙤𝙪 𝙤𝙬𝙣 𝙖𝙩 𝙖 𝙜𝙞𝙫𝙚𝙣 𝙩𝙞𝙢𝙚. (You can take it if/when you leave)𝙏𝙝𝙞𝙨 𝙞𝙨 𝙩𝙤 𝙚𝙣𝙘𝙤𝙪𝙧𝙖𝙜𝙚 𝙮𝙤𝙪 𝙩𝙤 𝙨𝙩𝙖𝙮 𝙬𝙞𝙩𝙝 𝙩𝙝𝙚 𝙘𝙤𝙢𝙥𝙖𝙣𝙮.

𝘈 𝘤𝘰𝘮𝘮𝘰𝘯 𝘦𝘹𝘢𝘮𝘱𝘭𝘦 𝘪𝘴 𝘢 4 𝘺𝘦𝘢𝘳 𝘴𝘤𝘩𝘦𝘥𝘶𝘭𝘦 𝘸𝘩𝘦𝘳𝘦 𝘺𝘰𝘶 𝘸𝘰𝘶𝘭𝘥 𝘣𝘦 25% “𝘷𝘦𝘴𝘵𝘦𝘥” 𝘦𝘢𝘤𝘩 𝘺𝘦𝘢𝘳.

𝘌𝘹𝘢𝘮𝘱𝘭𝘦: 𝘐𝘧 𝘵𝘩𝘦𝘪𝘳 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘪𝘰𝘯 𝘪𝘴 $1,000

𝘠𝘦𝘢𝘳 1: 25% 𝘷𝘦𝘴𝘵𝘦𝘥 = $250

𝘠𝘦𝘢𝘳 2: 50% 𝘷𝘦𝘴𝘵𝘦𝘥 = $500

𝘠𝘦𝘢𝘳 3: 75% 𝘷𝘦𝘴𝘵𝘦𝘥 = $750

𝘠𝘦𝘢𝘳 4: 100% 𝘷𝘦𝘴𝘵𝘦𝘥 = $1,000

3️⃣ 𝘾𝙤𝙢𝙥𝙤𝙪𝙣𝙙 𝙄𝙣𝙩𝙚𝙧𝙚𝙨𝙩 FREE money

𝘊𝘰𝘮𝘱𝘰𝘶𝘯𝘥 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘪𝘴 𝘵𝘩𝘦 𝘢𝘥𝘥𝘪𝘵𝘪𝘰𝘯 𝘰𝘧 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘵𝘰 𝘵𝘩𝘦 𝘱𝘳𝘪𝘯𝘤𝘪𝘱𝘢𝘭 𝘴𝘶𝘮 𝘰𝘧 𝘢 𝘭𝘰𝘢𝘯 𝘰𝘳 𝘥𝘦𝘱𝘰𝘴𝘪𝘵, 𝘰𝘳 𝘪𝘯 𝘰𝘵𝘩𝘦𝘳 𝘸𝘰𝘳𝘥𝘴, 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘰𝘯 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵. 𝘐𝘵 𝘪𝘴 𝘵𝘩𝘦 𝘳𝘦𝘴𝘶𝘭𝘵 𝘰𝘧 𝘳𝘦𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵, 𝘳𝘢𝘵𝘩𝘦𝘳 𝘵𝘩𝘢𝘯 𝘱𝘢𝘺𝘪𝘯𝘨 𝘪𝘵 𝘰𝘶𝘵, 𝘴𝘰 𝘵𝘩𝘢𝘵 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘪𝘯 𝘵𝘩𝘦 𝘯𝘦𝘹𝘵 𝘱𝘦𝘳𝘪𝘰𝘥 𝘪𝘴 𝘵𝘩𝘦𝘯 𝘦𝘢𝘳𝘯𝘦𝘥 𝘰𝘯 𝘵𝘩𝘦 𝘱𝘳𝘪𝘯𝘤𝘪𝘱𝘢𝘭 𝘴𝘶𝘮 𝘱𝘭𝘶𝘴 𝘱𝘳𝘦𝘷𝘪𝘰𝘶𝘴𝘭𝘺 𝘢𝘤𝘤𝘶𝘮𝘶𝘭𝘢𝘵𝘦𝘥 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵.

𝙇𝙤𝙣𝙜 𝙨𝙩𝙤𝙧𝙮 𝙨𝙝𝙤𝙧𝙩 - 𝙞𝙩’𝙨 𝙖𝙘𝙩𝙪𝙖𝙡𝙡𝙮 𝙢𝙤𝙧𝙚 𝙗𝙚𝙣𝙚𝙛𝙞𝙘𝙞𝙖𝙡 𝙩𝙤 𝙨𝙩𝙖𝙧𝙩 𝙚𝙖𝙧𝙡𝙮 𝙖𝙣𝙙 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙚 𝙖 𝙨𝙢𝙖𝙡𝙡 𝙖𝙢𝙤𝙪𝙣𝙩 𝙘𝙤𝙣𝙨𝙞𝙨𝙩𝙚𝙣𝙩𝙡𝙮 𝙩𝙝𝙖𝙣 𝙩𝙤 𝙨𝙩𝙖𝙧𝙩 𝙡𝙖𝙩𝙚𝙧 𝙖𝙣𝙙 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙚 𝙖 𝙡𝙖𝙧𝙜𝙚𝙧 𝙖𝙢𝙤𝙪𝙣𝙩. 𝙏𝙝𝙚 𝙥𝙤𝙬𝙚𝙧 𝙤𝙛 𝙘𝙤𝙢𝙥𝙤𝙪𝙣𝙙 𝙞𝙣𝙩𝙚𝙧𝙚𝙨𝙩 𝙤𝙫𝙚𝙧 𝙩𝙞𝙢𝙚 𝙬𝙞𝙡𝙡 𝙖𝙡𝙡𝙤𝙬 𝙮𝙤𝙪 𝙩𝙤 𝙘𝙤𝙣𝙩𝙧𝙞𝙗𝙪𝙩𝙚 𝙡𝙚𝙨𝙨 𝙖𝙣𝙙 𝙚𝙖𝙧𝙣 𝙢𝙤𝙧𝙚!

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𝗛𝗮𝘃𝗲 𝘆𝗼𝘂 𝘁𝗮𝗸𝗲𝗻 𝗮𝗱𝘃𝗮𝗻𝘁𝗮𝗴𝗲 𝗼𝗳 𝘁𝗵𝗲𝘀𝗲 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀 𝘆𝗲𝘁?