401(k) Retirement Benefit Plan
The 401(k)-retirement benefit plan is a deferred taxation pension account plan created by the United States in 1981. The United States government has specified the relevant provisions in Article 401(k) of the National Tax Law, so it is referred to as 401(k) plan. There are many types of retirement plans in the United States. Like civil servants, university employees provide pensions in accordance with their laws, and 401(k) is used only as employees of private companies.
Employers can provide this retirement plan or not. If they choose to provide this plan, they must be open to all employees. Employees are free to choose whether to participate or not, or they can choose a personal pension plan provided by a non-employer. The 401(k)-retirement benefit plan allows employees to allocate part of their salary to their personal retirement accounts to continue to leave. The amount of the allocation can be determined at their own discretion. Withdrawing the amount in the account before retirement often results in fines, but withdrawing after retirement can enjoy competitive discounts, and employers can also use funds to encourage employees to sever.
After the 401(k) plan is applied for by a labor employer, the employee allocates a certain amount of salary to his pension account every month. When the worker quits, he can choose to transfer the amount to the IRA of a financial institution or the 401(k) account of the new company.
This account has the following benefits for participants:
The capital appreciation part of the retirement account (including asset appreciation, dividends, index, etc.) is exempt from capital expenditure.
Employees can choose one of the following two budget arrangements:
Traditional 401(k): The amount transferred to the retirement account is deducted from the current year’s taxable income at the time of transfer, but is included in the annual taxable income at the time of retirement withdrawal.
Ross 401(k): The amount transferred to the retirement account is included in the taxable income of the year as usual, but it is no longer counted as taxable income at the time of retirement withdrawal.
Employees can retire to the account for the purpose of buying a house, and the amount of expenditure does not exceed 50% of the account amount., available investment and can be proposed after retirement)
In addition, if the employer supports the matching plan (Match), the employee’s funds to the retirement plan will receive the matching award from the employer.
The account also imposes the following restrictions on participants:
The amount of the 401(k)-retirement account spent annually exceeds 60% of the salary for the year or the upper limit of the 401(k) that the IRS can approve for the year.
Except for several special circumstances approved by the Internal Revenue Service (serious illness, living in poverty, etc.), the fact that the account is 60 years old will be subject to a 10% penalty.
The account must submit a certain amount of funds every year after the age of 70 and 6 months (the minimum range approved by the Internal Revenue Service). Otherwise, the Internal Revenue Service will impose a 50% penalty on the insufficient portion.
When employees put part of their salary into a 401(k) account, large companies and employers often allocate (match) a certain amount to employees in proportion. It is reflected that if the company's ratio is 50%, each time an employee pays 1 yuan to his 401 (k) account, the company will also pay 0.5 yuan to enter the employee's 401k account. The final employee's 401k account will have 1.5 yuan in income.
If the company’s employees are generally highly paid, the company often needs to encourage the early employees, especially low-paid employees, to invest in 401(k) with the company’s ratio. Therefore, the reason is that if you invest in 401k high-paid employees (high-paid employees, the IRS annual approval standard by the Internal Revenue Service) When the difference in the investment amount of low-salary employees investing in 401k exceeds 2%, the IRS will stop the company’s 401k plan on the grounds that the company’s 401k account is unfair. Therefore, the company often uses the company's ratio as an incentive, so that high-paying and low-paying employees are motivated to participate in the 401k plan annual scale, and fine the State Internal Revenue Service.
