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Colorado Certified Public Accountants: How Strong is your 401(k)?

No matter how old you are or what employment stage you are in, it’s always a good idea to keep an eye on your savings for retirement. Your Denver financial planner has the inside scoop as to how strong your retirement savings plans are.

Back in 2006, The Pension Protection Act was put in to place to strengthen 401(k)s because 401(k)s are going to be the main savings option for people 40 years old and younger. The plan is still evolving; however here are some trends that aim to further strengthen 401(k)s:

Companies are now automatically enrolling employees in 401(k) sponsored plans. Statistics show that 84% of workers participate in auto enrollment compared to more than 50% when enrollment isn’t automatic.

There are more Roth 401(k) options. A Roth (401)k plan allow participants to pay taxes on the money as it goes in rather than when the money is distributed. Younger workers who are in the early stages of their careers are attracted to these retirement plans.

High-deductible health plans with HSAs. Many employers are offering Health Savings Accounts to their younger employees to cut down insurance cots, as well as older workers saving to cover health care costs in retirement. The money that employees put towards a HSA is tax free, along with earning tax-free interest.

Around 40% of employers are giving their employees the option to self-direct stocks, bonds, and mutual funds that may be available outside of a normal 401(k) plan.

Finally, more employers are making more tools available that help workers translate savings into projected monthly income streams in retirement. This is an inexpensive benefit that can make your retirement planning much more effective.

The bottom line: 401(k)s are going to be the best retirement saving options for a long time. And with the options that now exist for retirement plans and some health plans (such as HSAs) the focus is keeping these plans strong for the foreseeable future. Keep saving for your retirement, and if you can, try to save at least 10% of your salary. You’re never too young or too old to start saving for your future.

How to use this Information Do you have specific tax questions regarding your retirement accounts? Contact KKB for all your tax accountant Denver consultant and we’ll make sure you’re getting the proper return on your retirement accounts and taxes.

How are you saving for retirement?

Posted in Retirement and Exit Strategies »

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