401(k) Plans :: Finance Financial Money Retirement Essays

401(k) PlansThere ar many economic contents facing the nation today. While roughly beextremely important in determining how the economy is balanced, others are non.Although this is true, that does not necessarily make these lesser importantissues obsolete. Take, for example, the recent issue of incarnate leaders adverting contributors to the 401(k) plan with company melodic phrase, instead of withcash. Though this is a relatively National issue, it still greatly affects alarge numerate of people in foreign areas as salutary as you and me. Because of this impression on such a large number of people, it is necessary that this issue bediscussed, as leave behind happen within the next a few(prenominal) paragraphs.In the way that a 401(k) stock unified plan is find out up timing iseverything. In a basic 401(k) plan employees stopue forth a set amount of dollars(usually pre-determined personally by the employee) ahead taxes are withheldThis portion of the employees paycheck is put toward his or her seclusion.What some companies select to do in order to make the 401(k) plan to a greater extent sweet for employees, is to match each employees investment in the plan bya certain percent. Here is where the problem comes in. Though some companiesmatch contributors every with cash or with a direct credit to the plan, othercompanies match with corporate stock. According to Richard Sasanow, a formerassistant of public communications at Ernst and Young, many experts considerthis to be one of the riskiest investments for a 401 (k)-but may be worth it ifyou think your company has a great future. (Sasanow, 45) A recent survey showsthat 18 percent of all companies made their matching contributions this way.Now for small, fast-growing businesses this would not seem as much of a risksince these companies stock are generally on the increase. But for some largecorporations, this is a great risk for employees since a lot of theirretirement money is now based on how we ll the company does. many say that because contribution matching is now based on how well thecompany does, then employees will strive to do a more efficient job in order toincrease the overall stock price of the company, which, in turn, will increasethe amount of retirement they will receive. Now the problem of timing comes inagain. Mr. Jim Davenport, a Staff author for The State Newspaper uses a goodexample An imaginary thespian for an oil company was looking forward toretiring at the end of the week. His 401(k) is fat and has been getting fatterthanks to company stock.