401(k) Plans :: Finance Financial Money Retirement Essays

401(k) PlansThere are many economic issues facing the nation today. While some areextremely most-valuable in determining how the economy is balanced, others are not.Although this is true, that does not necessarily make these lesser importantissues obsolete. Take, for example, the recent issue of corporate leadersmatching contributors to the 401(k) forge with company business line, instead of withcash. Though this is a relatively National issue, it still greatly affects alarge number of people in foreign areas as well as you and me. Because of thiseffect on such a large number of people, it is necessary that this issue bediscussed, as will happen at heart the next few paragraphs.In the way that a 401(k) stock matching proposal is set up timing iseverything. In a basic 401(k) plan employees put forth a set amount of dollars(usually pre-determined personally by the employee) before taxes are withheldThis portion of the employees paycheck is put toward his or her retirement.What som e companies opt to do in order to make the 401(k) plan moreattractive for employees, is to match each employees investment in the plan bya trustworthy percent. Here is where the problem comes in. Though some companiesmatch contributors either with cash or with a direct credit to the plan, othercompanies match with corporate stock. tally to Richard Sasanow, a formerassistant of public communications at Ernst and Young, many experts considerthis to be one of the riskiest investments for a 401 (k)-but may be worth it ifyou stand for your company has a great future. (Sasanow, 45) A recent survey showsthat 18 percent of all companies made their matching contributions this way.Now for small, fast-growing businesses this would not seem as much of a risksince these companies stock are generally on the increase. But for some largecorporations, this is a great risk for employees since a lot of theirretirement money is now based on how well the company does.Some say that because contribut ion matching is now based on how well thecompany does, then employees will strive to do a more efficient job in order toincrease the overall stock price of the company, which, in turn, will increasethe amount of retirement they will receive. Now the problem of timing comes inagain. Mr. Jim Davenport, a Staff Writer for The deposit Newspaper uses a goodexample An imaginary worker for an oil company was looking forward toretiring at the end of the week. His 401(k) is fat and has been acquire fatterthanks to company stock.