401K Plan Lawyer

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How Does a 401(k) Work?

A 401(k) is a retirement plan like an IRA, but instead of being a private plan it is sponsored by an employer.  An employee can decide to open a 401(k) fund that is provided by her employer.  The employee decides what percentage of her salary she will contribute to her 401(k) fund.  When the employee’s paycheck comes, the proper amount is deducted from the paycheck and put into the fund before the paycheck is taxed.

Like an IRA, the investment put into a 401(k) plan grows over time, and after the employee has reached a certain age (usually 59 ½ years old), she can begin withdrawing money from the account.  If the employee withdraws from the account before this time there is a penalty fee that must be paid.

What Benefits Does a 401(k) Plan Provide for Planning the Future of My Estate for after I Have Passed On?

Some of the advantages of a 401(k) plan become relevant when you plan to use your growing investment to pass on to your family and other beneficiaries after you have died: 

Should I Consult an Attorney When Planning Out the Future of My Estate?

Planning how your estate will be distributed and how your beneficiaries will be taken care of after you have passed on can be complex and full of options you may not fully understand.  You may want to consult an attorney with experience in estate planning.  Your attorney will be able to help you understand what options are available to you, as well as the implications of all those options.

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Last Modified: 04-21-2014 10:48 AM PDT

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