Most 401(k)s are offered through companies as a benefit to employees, since 401(k)s are ultimately cheaper for the company than the more traditional pension. As an added incentive, companies will contribute to their employees' plans, usually by determining a certain percentage based on how much the employee is contributing the more you put in your 401(k) plan the more your company will contribute. People with 401(k)s can only contribute a maximum amount of money to their plans every year, and employer contributions do not go towards this maximum.
If you're like most people, you're very concerned with having a stable and secure retirement. With no more paychecks coming in, paying the bills and maintaining the quality of life you're used to will be a challenge. So, that's why building a healthy 401(k) fund is important. What's even better is that many companies will add to this fund above and beyond what you put in and this money has nothing to do with your income. It's a bonus, and it does not go towards your annual 401(k) contribution limit, which in 2008 was $15,500 (and is set to rise in 2009). So, once you hit your max limit, you've still got all that money your company has contributed. If you've put in the maximum of $15,500 this year, you may still have an extra $5,000 on top of that from your company.
Retirement plans such as the 401(k) are complex and you need to do research to fully understand them, since they're subject to all kinds of rules and regulations, especially when it comes time to pay taxes on them. You should consult with a financial adviser or a representative of your company's human resources department and go over everything in as much detail as you need in order to feel comfortable. The last thing you want to do is make an avoidable mistake when it comes to your finances.
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