Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved1 Introduction The 401(k) is a defined contribution plan introduced in 1978 Many companies have switched from a pension plan to a 401(k) It has become popular with both employees and employers It is currently the designated retirement plan for 3 of every 4 companies Moving from a pension plan to a 401(k) has shifted the responsibility for retirement from the company directly to the employee

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved2 Objectives Explain how a 401(k) works You should be able to do the following after completing this lesson! Discuss the popularity of the 401(k) Review the advantages of having a 401(k) Identify why the employer matching funds are important Review the disadvantages of having a 401(k) Describe how you become vested in a 401(k) Review the maximum amounts that can be contributed to a 401(k) each year Explain when money can be withdrawn from a 401(k) Define the key terms introduced in this lesson

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – What is a 401(k)? What a Defined Contribution Plan is Who provides a 401(k) Who will set up a 401(k) for you Who is eligible to participate in a 401(k) Who can contribute to your 401(k) Who decides how your contributions are invested What factors help your contributions grow In this Section, you will learn

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Advantages of a 401(k) What the advantages of a 401(k) are How much you can contribute to a 401(k) Why your contributions are tax-deferred What happens to your money in a 401(k) if you leave the company or are fired In this Section, you will learn Who decides how your money will be invested Lost 401(k) Funds Example You will run the following Interactive Example

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – 401(k) Disadvantages How many investments are included in a 401(k) Why 401(k) investments are not guaranteed to grow How long it takes to become vested When you can contribute to a 401(k) When you can withdraw money from a 401(k) Why participation in a 401(k) is optional In this Section, you will learn What the disadvantages of a 401(k) are Why many employees cash-out their 401(k) when they leave the company

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – 401(k) Contribution Limits How much you and your employer can contribute How companies limit the amount you can contribute to a 401(k) What the typical percentage a company will allow you to contribute to a 401(k) is What the typical employer matching percentage is In this Section, you will learn How much you can contribute to a 401(k)

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Withdrawing the Money What an early withdrawal penalty is How your withdrawals will be taxed What the IRS Hardship guidelines are When you must begin taking Required Minimum Distributions In this Section, you will learn When you can begin withdrawing money from a 401(k) What the penalty is for an early withdrawal

Lesson (k) July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved8 Discussion Questions Why don’t companies help employees who have no knowledge of investing select the best investments for their 401(k)? How does a Roth 401(k) work and why is it gaining popularity?