--- title: The 411 on 401(k)s description: Here is some relevant information you need to know about your 401(k) and how it helps you save or retirement. image: https://go.hfcu.org/hubfs/images/Hands%20holding%20a%20nest%20egg..jpg --- [![MoneyWisdom_HFCU_r2](https://go.hfcu.org/hs-fs/hubfs/MoneyWisdom_HFCU_r2.png?width=464&name=MoneyWisdom_HFCU_r2.png "MoneyWisdom_HFCU_r2")](https://go.hfcu.org/blog) Filter by Category** - [Show All](https://go.hfcu.org/blog) - [Security](https://go.hfcu.org/blog/topic/security) - [Personal Finance](https://go.hfcu.org/blog/topic/personal-finance) - [Auto](https://go.hfcu.org/blog/topic/auto) - [Business](https://go.hfcu.org/blog/topic/business) - [Credit Score](https://go.hfcu.org/blog/topic/credit-score) - [Home](https://go.hfcu.org/blog/topic/home) - [Credit Cards](https://go.hfcu.org/blog/topic/credit-cards) - [Life Changes](https://go.hfcu.org/blog/topic/life-changes) - [Insurance](https://go.hfcu.org/blog/topic/insurance) - [Investments](https://go.hfcu.org/blog/topic/investments) Filter by Category** - 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[dormant account (1)](https://go.hfcu.org/blog/topic/dormant-account) - [inactive account (1)](https://go.hfcu.org/blog/topic/inactive-account) # The 411 on 401(k)s ** [Hanscom Federal Credit Union](https://go.hfcu.org/blog/author/hanscom-federal-credit-union) ** Apr 07, 2017 ![Hands holding a nest egg..jpg](https://go.hfcu.org/hubfs/images/Hands%20holding%20a%20nest%20egg..jpg) As pension-style retirement plans have fallen by the wayside, the 401(k) plan has become the go-to option for many companies looking to help employees save for retirement. The 401(k) enables workers to set money aside, and not pay taxes on it or its earnings, until they retire and begin withdrawing funds from the account. Here are some key things you need to know about these tax-advantaged accounts. ### **Contribution Amounts** One of the best things about tax-deferred retirement accounts like the 401(k) is that you make contributions pre-tax, so in addition to saving for the future, you’re reducing your income taxes right now. But there are limits, set by the IRS, to how much you can put away each year. For 2016, the limit is $18,000; however, if you’re 50 or older, you can set aside up to $6,000 more per year in “catch up” contributions. If your company automatically enrolls employees in their 401(k), the default contribution amount probably won’t be anything close to the maximum, but you can probably elect to contribute more. If contributing the maximum is not doable right now, one smart strategy is to funnel any future salary increases into your 401(k) until you reach the maximum contribution. ### **Matching Funds** As part of their employee benefit package, many companies will match employee contributions to a 401(k) up to a certain percentage. For example, say you make $50,000 a year and your company matches up to 3% of your salary. When you contribute 3% (that’s $1,500) to the 401(k), the employer match of that amount boosts your annual investment to $3,000. If your employer offers matching funds, be sure to contribute at least as much as you need to get the full match. Otherwise, you’re leaving money on the table. ### **Vesting** Any money that you contribute to your 401(k) is completely owned by you, from the start. Though your investments may go up or down, you still own it when you leave your employer. Some companies, though, impose “vesting” requirements on the matching funds they contribute to your account. They may, for example, require you to stay employed for a set amount of time before you’re entitled to (or “vested” in) the funds they contribute to your account. So, if you leave your job before fulfilling your employer’s vesting requirements, you may receive only a portion (or none) of the matching funds. ### **Investment Options** Most 401(k) plans have several options for investing your retirement savings and some may even offer the services of a financial advisor to help you choose the right mix for your age and investment goals. As a general rule, though, the younger you are, the more risks you can take because you have more time for make up for potential losses. As you get closer to retirement, you’ll probably want to shift toward more conservative investments. Whatever your age, though, it’s important to be diversified – which is just a fancy way of saying “don’t keep all your eggs in one basket.” Hanscom Investment Services is available to assist you with your financial goals, including retirement savings. Learn more about the many financial services offered [here](http://www.hanscomfinancialservices.org/).† †Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Hanscom Federal Credit Union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Hanscom Investment Services, and may also be employees of Hanscom Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Hanscom Federal Credit Union. Securities and insurance offered through LPL or its affiliates are:  Not Insured by NCUA or Any Other Government Agency / Not Hanscom Federal Credit Union Guaranteed / Not Hanscom Federal Credit Union Deposits or Obligations / May Lose Value ** [Life Changes](https://go.hfcu.org/blog/topic/life-changes) [** 5 Ways to Use Your Home Equity Line of Credit ](https://go.hfcu.org/blog/bid/183166/best-uses-for-your-home-equity-line-of-credit) [** When should my child get a debit card? ](https://go.hfcu.org/blog/bid/175205/when-should-my-child-get-a-debit-card) ### About Author ![Hanscom Federal Credit Union](https://go.hfcu.org/hubfs/HFCU-Profile-1000x1000.jpg) Hanscom Federal Credit Union Hanscom Federal Credit Union, a purpose-driven $1.9 billion organization based in Littleton, MA, empowers its members to achieve financial wellness. Hanscom FCU serves over 95,000 members across the country and overseas through 16 branches, over 100,000 surcharge-free ATMs, 5,000 contact centers, and a web-based branch. 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The content of this third-party site, including materials and information, is solely the responsibility of the provider of the site. The Credit Union is not responsible for any such third-party content. Any transactions that you enter into with a vendor, merchant or other party that you access through this third-party site are solely between you and that vendor, merchant or other party. The Credit Union does not endorse the content contained in this third-party site, nor the organization publishing the site, and hereby disclaims any responsibility for such content. 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The Credit Union Privacy Policy does not apply to this third-party site, and for further information you should consult the privacy disclosures of the third-party site. ### Popular Posts [What You Need to Know About Putting Your Home in a Trust](https://go.hfcu.org/blog/what-you-need-to-know-about-putting-your-home-in-a-trust) ![older man looking at top retirement worry on digital device](https://go.hfcu.org/hubfs/Untitled%20design%20-%202022-02-10T072804.753.jpg) [What You Need to Know About Your Federal Tax Bracket](https://go.hfcu.org/blog/what-you-need-to-know-about-your-tax-bracket) ![older man looking at top retirement worry on digital device](https://go.hfcu.org/hubfs/Untitled%20design%20-%202021-03-22T123305.900.jpg) [6 Boat Types to Get on the Water](https://go.hfcu.org/blog/6-boat-types-to-get-on-the-water) ![older man looking at top retirement worry on digital device](https://go.hfcu.org/hubfs/images/Jet_Ski.jpg) [23 Organizations Dedicated to the Needs of Seniors](https://go.hfcu.org/blog/23-organizations-dedicated-to-the-needs-of-seniors) ![older man looking at top retirement worry on digital device](https://go.hfcu.org/hubfs/Senior%20citizens.jpg) [9 Smart Moves for Lottery Winners](https://go.hfcu.org/blog/lottery) ![older man looking at top retirement worry on digital device](https://go.hfcu.org/hubfs/images/lottery_winner.jpg) ### Recent Posts - [![National Credit Union Administration](https://go.hfcu.org/hs-fs/hubfs/NCUA-logo-small.png?width=95&name=NCUA-logo-small.png) ](https://www.ncua.gov/) [![Equal Housing Lender](https://go.hfcu.org/hs-fs/hubfs/EHL-logo-small.png?width=65&name=EHL-logo-small.png)](https://www.hud.gov/fairhousing) - @ 2023 [Hanscom Federal Credit Union](https://www.hfcu.org/) - Federally insured by the National Credit Union Administration. - [Privacy Policy](https://www.hfcu.org/content/docs/Privacy_Notice.pdf) **Disclosure:** Hanscom Federal Credit Union does not provide and is not responsible for any products, services, or overall website content available at any third-party sites linked within this blog. 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Please consult the privacy disclosures on those linked sites for further information. ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Hanscom Federal Credit Union" }, "dateModified" : "February 17, 2020, 1:00:35 PM", "datePublished" : "2017-04-07 11:00:00", "description" : "Here is some relevant information you need to know about your 401(k) and how it helps you save or retirement.", "headline" : "The 411 on 401(k)s", "image" : { "@type" : "ImageObject", "url" : "https://cdn2.hubspot.net/hubfs/118438/images/Hands%20holding%20a%20nest%20egg..jpg" }, "mainEntityOfPage" : { "@id" : "https://go.hfcu.org/blog/the-411-on-401ks", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://cdn2.hubspot.net/hubfs/118438/Logo%202.jpg" }, "name" : "Hanscom Federal Credit Union" } } ```