Even today, free money still exists. It’s called “matching contributions”. You can get more money from your employer without doing any more work than you already do! Here’s how…..
If your employer offers a 401(k), chances are they also offer good matching contribution options. Here’s how matching contributions work as free money….
The Federal Government wants to encourage individuals to save for their retirement. They want the population to be as economically healthy as possible and they don’t want the social retirement programs to be too strained by too many people relying heavily on it at the same time (social security). To encourage employers to help out their employees, the Feds offer them tax incentives.
Employers are given tax breaks by the Federal Government in the amount they contribute to the retirement plans of their employees. Not the amount the employees elect to contribute, the amount that the employers ADD to the account!
To help employers decide how much to contribute and to whom, they use a matching contribution process. Employers will agree to match a percentage of the contributions employees put into their own 401(k)s with the same amount. Some really good plans even add more than 100% of their employee contributions!
An example is that an employee puts $10.00 into the account. The employer matches by adding an additional $10.00. This would be a 100% contribution match. A 50% contribution match would be half of what the employee contributed, so it would be $5.00 instead of $10.00.
For the 50% match, the balance is now $15.00. For the 100% match, the balance is now $20.00 before the money has even been invested in the market!!!
The employee put $10.00 of their own money into the account, then went about their lives as usual. In the meantime, behind the scenes, their employer added money…. Free money!
Once money is added to a 401(k) it isn’t removed. That means when you change jobs, you can take it with you. It literally becomes your money!
The employer is happy because they get tax breaks on the money they give to their employees this way. The Federal Government is happy because they want people to save for retirement. The individuals are happy because they are getting money added to their accounts without having to do any more work! They are increasing the amount they are given by their employers without increasing the amount of work they do!
Free money exists today thanks to the efforts of employers and the Federal Government. It’s up to us to take advantage of this opportunity!
About Laurel Hardy:
Mrs. Hardy is an investment advisor representative of and offers investment advisory services through Bespoke Wealth Management, LLC, a registered investment adviser offering advisory services in the State of Connecticut and other jurisdictions where registered or exempted. Main Office: 1476 Poquonock Ave, Windsor, CT 06095. Tel: 844-245-7135. Additional disclosures are available by visiting the disclaimer page of bespokenwealth.com.
