5 Reasons you should open a 401(k) now and not later:
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It's easy to save and invest your money.
The money contributed to your 401(k) is automatically deducted from your paycheck. Your money is invested in funds you or your investor feels are appropriate for your account.
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Your money is taken out of your check before it is taxed.
By taking the money out before it is taxed, participants are able to invest more money and often end up taking home a slightly larger paycheck while saving at the same time. See our Take home pay calculator see how your paycheck will be effected by a 401(k) plan.
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Your plan's earnings are not taxed immediately.
Since none of your money (contributions or earnings) are taxed until they are withdrawn, many people end up paying less taxes because they are in a lower tax bracket at retirement. Participants also have more money working for them in their accounts due to the differed taxation.
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The amount contributed is up to you.
The amount contributed is often different for each participant, this allows each one to tailor their account to their specific situation. Participants are allowed to contribute as much or as little as they choose, so long as they don't go over the maximum allowed by the government.
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Participants own the account.
Since participants own their account it can be "rolled over" to a new account at a different employer, adding further security to the participants' retirement plan.
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Employers often match employees' contributions.
Many employers will match a certain percent of the money contributed to employees' 401(k) plans. This allows the participants to save additional money without having to do additional work.