Understanding Your 401k: The Basics

A 401(k) is an employee-sponsored, tax-advantaged retirement savings plan. It allows employees to set aside a portion of each paycheck to invest in their account and choose how to allocate these funds among the many investment vehicles available in their plan. Although 401(k) plans are not required to offer employer-matching contributions, most plans do.

Benefits of 401(k) Plans

Even without an employer match, these retirement savings plans can offer significant benefits, particularly when it comes to taxes. 401(k) contributions are made with pre-tax dollars, which means that each dollar you save for retirement lowers your taxable income for that year, so you owe less at tax time.

There are other facts to 401(k)s compared to other types of retirement plans.

  • 401(k)s can offer higher contribution limits compared to IRAs.
  • Employees who are 50 and older can make additional “catch-up” contributions each year to accelerate their retirement savings.
  • 401(k)s are sheltered from creditors. In the event of financial challenges, your funds are safe.

Types of 401k Plans

You have multiple options when it comes to choosing the right 401(k) plan for your retirement needs:


Traditional 401(k)

A traditional 401(k) is the most common plan. It is employer-sponsored and offers tax-deferred contributions. Some plans allow employer matches. Income taxes for contributions and earnings are paid when the funds are withdrawn.

Roth 401(k)

Employer-sponsored Roth 401(k) plans are similar to traditional 401(k)s with one significant exception. Contributions are made after taxes are taken out. However—income, interest, dividends, and capital gains are not taxed at the time of withdrawal, which is helpful for retirees with fixed incomes.


A 403(b) is not technically a 401(k) plan, but the two retirement savings vehicles are closely related. 403(b)s are plans designated for public sector workers, including employees at public schools and higher education institutions, government agencies, and other tax-exempt organizations. Traditional 403(b)s utilize pretax contributions, while Roth 403(b)s use after-tax money.


Personalized 401k Consultations

Your dream for the future is highly personal, and no two retirement planning strategies are alike. Depending on your employment and marital status, you may potentially have access to a combination of plans. Making sense of when and how to optimize your retirement contributions can be confusing.

EP Wealth financial advisors can help. We start with an initial meeting to discuss your current portfolio, as well as your retirement income planning goals. Based on this meeting, your advisor develops a customized 401(k) strategy to meet your needs today, in the years ahead, and throughout the course of your lifetime.


Ongoing 401k Plan Management

Unlike other firms who may sign you up for a 401(k) and walk away, we know how important it is to continually assess your retirement plan.

Your advisor conducts periodic reviews to determine if you are on track to reach your retirement number, and recommends market-driven adjustments to get you back on course if not. At EP Wealth, we are invested in your financial health. We are here to answer your questions, explain your options, and help your financial future through retirement planning solutions.


Who Can Benefit From Our 401k Planning

401(k) planning can be helpful for individuals of all ages and stages of life, including:

  • Early-career professionals planning ahead
  • Mid-career individuals reassessing their retirement strategies
  • Pre-retirees seeking to refine their approach in the final years before retirement
  • Retirees in need of guidance on smart withdrawal strategies and tax implications

If you haven’t yet taken advantage of the benefits of 401(k)s, don’t be discouraged. Today can be the day to start planning ahead.


Trust Our Retirement Planning With Your 401(k) Strategy

An investment advisor can guide your retirement savings EP Wealth advisors tailor a plan for retirement based on your profession, your short- and long-term goals, and your stage of life.

We operate on the core principles of ethical, transparent, and informed advisory. We always act in your best interests. Our track record of satisfied clients and industry awards reflect our commitment to success. Put our skills and experience to work for you.

Find an EP Wealth advisor near you to find out more about our services or schedule a financial health assessment today.


A Defined Contribution 401(k) plan is a complex retirement savings vehicle that is subject to regulations under the Internal Revenue Service (“IRS”), Department of Labor (“DOL”) and The Employee Retirement Income Security Act (“ERISA”). ERISA and other governing regulations may prohibit the use of some plans and/or the exclusion of employees from retirement benefits. Please consult with a Retirement Plan Administrator or ERISA attorney prior to enacting anything referenced here. Other alternatives may exists that may prove to be more beneficial or better suited for your individual needs of your company. The information presented was obtained from sources deemed to be reliable. However, we cannot guarantee the accuracy or completeness of the information offered. All expressions of opinion are subject to change without notice.

Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.

Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.

The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.

All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. The risk of loss can never be eliminated even if working with a professional.

EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability


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