Get the Most from the Flexibility of the 401A Retirement Plan

If you are looking for a retirement plan that is flexible enough to meet your retirement needs and requirements, don't look farther, you might well be considering a 401a retirement plan.

In a 401a retirement plan, contributions are made by the individual, his/her employer, or both.  The methods of contributions, however, are decided by the employer with the following options:  (1) the employer contributes a fixed amount of funds with or without the compulsory employee contribution; (2) the employee contributes a fixed portion of his paycheck which is then matched by the employer; and (3) the employer matches an employee's contributions within a set range. 

Under the plan, an employee may choose between voluntary and compulsory contributions.  For instance, an employee under this plan is required to contribute a portion of his paycheck which is deducted before tax.  He may also engage in voluntary contributions on an after tax basis but limited to about 25 percent of his paycheck.

There are several benefits and advantages that an individual can enjoy by participating in a 401a retirement plan.  Among these are:  (1) the amount of contributions is tax deductible and therefore you decrease the amount of taxes while increasing your retirement investment; (2) you can rollover the amount to any other retirement plans in the event that you resign from the company where you have started your plan;  (3) you enjoy the convenience of investing through payroll deduction; (4) the before tax contributions are free from income tax deductions unless withdrawn; (5) you have the power to choose from a broad variety of investment options with no minimum requirements; (6) you can customize your payment schedule to suit your needs; (7) you have the capability to manage and control your investment.

Employers may use the 401a retirement plan as a means to retain valuable employees.  Since this retirement plan is an employer-based contribution, it gives more flexibility to the employer in determining the amount of contributions that can be attached to the performance of duties and responsibilities of their individual employees. 

There is not much difference from a 401k retirement plan except that in this plan, it is the employer who decides to contribute an amount that is determined by the employer at his sole discretion.  The plan can be customized to suit the unique needs and requirements of an employer.

Several distribution options are made available to an individual under this retirement plan:  (1) lump sum; (2) periodic payments following a partial lump sum; (3) monthly, quarterly, or annual distribution in equal installment scheme that does not go over an individual's life expectancy. 

As with the other retirement plans, the money you invested shall become your property and as such in the event of any changes in your employment, the money in the account remains your ownership.  You have the prerogative to transfer it into other retirement plans such as 401k, 457, 403b, or the traditional IRA.

If you want to be assured of the quality of your life after retirement, get your 401a retirement plan now.