When it comes to planning for your future, one of the most productive things you can do is to set up a 401(k) savings account. Whether you’re new to the workforce or simply researching how to optimize your retirement, James Brown, the Godfather of Zenefits Payroll, is here to answer your most pressing questions in bite-sized form. This week, Mr. Brown explains what makes a 401(k) beneficial:
As James mentioned, the unique benefit of a 401(k) is that this type of account is tax deferred, meaning that the money you invest (in addition to any growth from later investments) goes untaxed. The finances you allocate here are not subject to federal and state income taxes. However, there are limitations based on contribution amounts that are correlated to age. For example, if an employee is under 50 years old, the maximum contribution he or she can make annually is $18,000. If the employee is at least 50 years old, that contribution limit increases to a $24,000 annually. As with any planning scheme, the earlier you start, the better off you’ll be!
Zenefits integrates with best-in-breed 401(k) providers to enable employers to bring the very best benefits to their employees. Learn more about empowering your team with HR software that connects whatever your business needs from payroll and benefits to modern HR here.