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Participating in your Company's 401(k) Isn't a No-Brainer Anymore

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Services for Real Estate Pros with Think Glink Media

Most financial experts believe you should invest the minimum necessary to obtain the maximum corporate match. This makes sense. But what if your employer no longer matches? Equifax personal finance blogger and retirement expert Dan Solin has some advice.



When debating whether or not to contribute to your 401(k), there are other issues to consider. These factors are rarely discussed in the financial media:

  • Your 401(k) contributions are tax-deferred, not tax-free. That means when you make withdrawals, you’ll have to pay taxes on the full amount withdrawn, at your marginal ordinary income tax rate on the date of withdrawal.
  • Even if tax rates stay the same, don’t assume you will be in a lower tax bracket when you’re required to start taking minimum withdrawals from your 401(k) plan.
  • Finally, there is the risk of retroactive tax legislation that could reduce, or even eliminate, the benefits of 401(k) plans. The U.S. Supreme Court has sanctioned retroactive tax legislation going back as far as ten years, referring to it as “customary practice."




    For more information, including retirement savings options other than a company 401(k), check out the full article by Equifax Personal Finance blogger Dan Solin
    http://retirement.equifax.com/2010/10/participating-in-your-companys-401k.html

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