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Module 6d

Retirement and Estate Planning > Planning for a Secure Retirement > Module 6d
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Module 6d: Investment Decisions

Lisa works for an employoer who has a 401(k) plan. This type of plan is the most well-known of all "defined-contribution" plans. The amount that an employee contributes each year is not subject to income tax, and earnings on the contributions grow tax-deferred until the employee retires and begins withdrawing from the account. When employees retire, the amount they withdraw is subject to income tax. Plans have regulations on eligibility and withdrawls.

Many employers "match" the contribution of an employee up to some limit.

Question:

Who makes the decision about how Lisa's savings are invested?

Answer


If Lisa worked for a not-for-profit employer, it is possible that the employer would sponsor a 403(b) salary-reduction plan that is similar to a 401(k) plan. State and local government employees may contribute to "457" plans that are similar to a 401(k) plan.

Follow-up:

  1. Ask your employer what type of plan is available.
  2. Find out if you are eligible to participate.

Module 6 - Module 6a | Module 6b | Module 6c | Module 6d | Module 6e