Why Set Up A 401K Plan?

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   David G. Pipes, CLU®, RICP®

   Business Development Officer, T.D. McNeil Insurance Services, Fresno, California

   A 401(k) plan is established by an employer for the benefit of employees.  The employer might do this to retain trained workers and to demonstrate appreciation.  Employees are invited to participate in the company’s 401(k.)  Normally, a sum of money is collected each pay period for the 401(k.) The amount collected reduces the taxable income of the employee.  Some employer’s match contributions, generally to a specified limit. The employee and the employer contributions are held in a separate account.

   Answered on August 25, 2014

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