401 k plans and changing jobs review

Question 1

Features

Answer 1

A 401 k plan is a plan that allows people to invest a certain amount of money into a bank where if the money is pretaxed will not be taxed when placed into an account. The money taxed along with penalty tax when withdrawn and taxed when withdrawn after reitrement. It is organized by an employer or the company you work for.

Question 2

Benefits over traditional IRA

Answer 2

You can add up to 16, 500 dollars and up to 50,000 if matched by employer in comparision to 5000 for IRA

Question 3

Disadvantage over trad. IRA

Answer 3

The employer chooses which stock you invest in

Question 4

When Changing Jobs:

Answer 4

you can either:

1. Keep money in original 401 k plan-could be flexible
2. Transfer to a new 401 k plan-all money is kept in one place
3. Place in IRA- is more flexible
4. Withdraw from a bank- not recommeded