401K/403B Do we qualify to invest/contribute?

These things are so confusing to me and I want to just ignore it but I know that will be a bad decision. Any comments?

Yes. There are a few caveats to 401k contribution, however:

1. You must be at least 21.
2. You can only contribute what you earn from an employer. Other income sources must go into a different plan.
3. Your employer may defer your enrollment for up to 1 year (prob doesnt apply to you)


403b's are generally used by 501(c)(3) firms, government organizations, schools, religious entities, etc.

Thanks for the response circa!

Nice, I'm 22 so I'll be able to start contributing, I was thinking of contributing 1% of my pay just to get a feel of it. I work for a non-profit so I'm guessing that's why it's called a 403b instead of 401k.

I did a bit of research on this since I'm in the same boat...

A 401k is just your savings that's managed by someone like fidelity in the stock market. If you change employer, your 401k goes with you -- it's your money. The best part of your 401k is that it's not taxable!! This is perfect for someone like me that's single and has no dependents. When you do decide to cashout your retirement money you will be taxed, but hopefully by this time you're married and have dependents and thus will pay less taxes on your income. No, this is not tax evasion believe it or not...it's an incentive to save and invest because people are stupid and don't like to save money.

What you should look for when applying for a job is how much the company is willing to match. What most companies don't tell your is their retention requirement. By that I mean that if a company matches 3% and then you leave the company, then they can reclaim the 3% they gave you. Most companies will let you keep some of the money depending how long you've been working there. You need to find that information out.

If you scored anything less than a 5 on your W-5, then I recommend you start a 401k now. Assuming you're not to pressed for cash.

Not true. 401k's are tax deferred, which you did in fact explain, but that's not the same as being "not taxable". In contrast to your statement about dependents -- most people at the age of 65-70ish don't have many dependents. In addition, most 65-70 year olds are "richer" (or, at least, the ideal scenario is to be richer). That said, you'll likely be paying more on your withdrawals as you'll likely be in a higher tax bracket then than you are in now -- barring any reform, that is.

That's why Roth investment vehicles were brought to existence. They allow your contributions to be taxed, but your withdrawals to be tax free.

401 (k) plan is a common name in the U.S. tax-qualified defined contribution retirement from subsection 401 (k) of the Internal Revenue Tax Code. According to the plan, pension contributions (and sometimes in relation to) the employer, the employee's reduced salary before tax and the maximum annual fee $ 17,500 (as of 2013).

I contribute 6% and my employee matches up to 6% with company stock.

Part is roth part is traditional.