About 70% of 401(k) participants are passing up free money.
Many employers match an employees’ contribution to their 401(k) plans. The most common match is $1 match for every $1 that the employee contributes up to 3%. Most employees are not contributing enough to capture the full match that is available. The employee’s contribution is pre-tax. That is, the money contributed is not taxed. The contributions, employer match and any income and/or gains will be deferred. They will be taxed when the funds are withdrawn in the future.
If the employer offers a Roth 401(k), the employees’ contribution is made with money after it is taxed. The contributions, the employer match and income and/or gains is not taxed when it is withdrawn by the employee.
FINRA recently issued an alert encouraging employees to take the free money. READ MORE