Four Mistakes to Avoid with 401ks

Let’s first talk about what a 401k is. When you sign that offer letter from your employer, they provide you certain benefits. If you’re fresh out of college, you would usually brush aside the stacks of papers they give you explaining what these benefits are. However, those benefits are very important to learn about and get familiar with. One of these benefits is the 401k/retirement account. A 401k/retirement account lets you save money for your future. The money you contribute to this account is tax deductible, meaning you can deduct your contributions from your taxable income at the end of the year to a maximum of about $19,500 as of 2020. This means you are not paying taxes upfront on that portion of your income, but deferring them to a later date when you withdraw from it. Usually employers would offer you a certain company match contribution. So if you were to put 5%, they would offer to match your contribution up to 5%. This means that you are getting 5% of free money and increasing your total stashed amount to 10% of your salary! <a href="https://abhinavthakur.medium.com/four-mistakes-to-avoid-with-401ks-1f69257c760d">Click Here</a>