Our 2021 401(k) Champions®
A: [A few years back]...[t]wo other employees and I asked the company for a better plan. And since the Fool is a very employee-centered company that appreciates a measure of moxie, the powers-that-wear-jester-caps said, “Sounds great! Form a committee and help improve our plan.” Which is what we did....The high participation rate has been aided by [our] committee deciding to implement auto-enrollment for new employees, and auto-escalation that moves employees to the fully matched amount (9%) by their third anniversary. [T]he real lesson here is that employees can band together to advocate for more features, lower costs, better investment choices, or a new plan...many people who are responsible for choosing a company’s plan may not be fully aware of all the possibilities.
A: The big reasons I contribute to a 401(k) are the employer match (if available), the contribution limit, and the tax advantages. If your employer offers a match for your retirement account this is a part of your compensation package. If you are not contributing enough to receive the full match (or not contributing at all) you are leaving money on the table that future you could use!...Finally, by contributing to a pre-tax 401k, you can reduce your current tax burden because those contributions are not included in your income...Ultimately, receiving the full match is step one. If you have an employer match of 4%, contribute 4% to your 401(k) so that your employer is contributing the full match. Get that FREE MONEY y'all!
A: Since 1984, I have participated in seven plans with pre-tax contribution capability. Each had its own features, eligibility, investments, and payout provisions. However, all of them provided me access to a plan that helped ensure I could easily develop a savings habit - starting in my 30's and continuing for over 3 decades, to this day. Concurrently, my wife has also been an active saver via pre-tax contributions in a retirement savings plan. As a result, we have a lifetime of savings in 401k and 403b plans, and this son of a firefighter is certain to become part of a middle-class millionaire household.