401(k) Plans :: Finance Financial Money Retirement Essays

401(k) PlansThere be many economic issues face up the nation today. While some areextremely important in determining how the economy is balanced, others are non.Although this is true, that does not necessarily make these lesser importantissues obsolete. Take, for example, the recent issue of corporate leadersco-ordinated contributors to the 401(k) propose with company stock, instead of withcash. Though this is a relatively National issue, it fluent large(p)ly affects alarge number of people in contradictory areas as well as you and me. Because of thiseffect on such a large number of people, it is necessary that this issue bediscussed, as get out happen within the next few paragraphs.In the way that a 401(k) stock matching plan is pay off up clock iseverything. In a basic 401(k) plan employees put forth a set amount of dollars(usually pre-determined personally by the employee) before taxes are withheldThis portion of the employees paycheck is put toward his or her retirement. What some companies prefer to do in allege to make the 401(k) plan moreattractive for employees, is to match each employees investment funds in the plan bya certain percent. Here is where the riddle comes in. Though some companiesmatch contributors either with cash or with a direct credit to the plan, othercompanies match with corporate stock. According to Richard Sasanow, a formerassistant of public communications at Ernst and Young, many experts analysethis to be one of the riskiest investments for a 401 (k)-but may be worth it ifyou conceptualize your company has a great future. (Sasanow, 45) A recent survey showsthat 18 percent of all companies made their matching contributions this way.Now for small, fast-growing businesses this would not seem as much of a risksince these companies stock are generally on the increase. But for some largecorporations, this is a great risk for employees since a lot of theirretirement money is now establish on how well the company does.Some say that because contribution matching is now based on how well thecompany does, then employees entrust strive to do a more efficient job in order toincrease the overall stock price of the company, which, in turn, leave alone increasethe amount of retirement they will receive. Now the problem of timing comes inagain. Mr. Jim Davenport, a Staff Writer for The State Newspaper uses a goodexample An imaginary worker for an oil company was aspect forward toretiring at the end of the week. His 401(k) is fat and has been getting fatterthank to company stock.