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Are You Missing Out On Free Money?

Mar 6th, 2007 by Wealth Builder [This post is written and copyrighted by Wealth Building Lessons (http://www.wealthbuildinglessons.com).]

There are many companies in the US that offer a matching contribution to employee 401(k) plans. Usually its a 50% match up to about 3% of the employees salary. Sometimes its a lot more generous. Some educational institutions offer a 200% match with no limits! Some companies offer a more complex graduated matching plan.

Lets look at an example. If you earn $50,000/year and your company offers a 50% match upto 6% of your salary, then for the first $3,000 you contribute, your company will put in $1,500. Thats a 50% return in your first year! Considering that the company also has to pay just over 15% payroll tax on all contributions, its pretty generous.

If you aren’t contributing the minimum amount to take advantage of your companies matching, you’re missing out on free money. Also considering that you get a tax break for contributing, its a must-do for anyone who wants to create wealth.

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3 Responses to “Are You Missing Out On Free Money?”

on 07 Mar 2007 at 11:28 pm1Eirk

Do you think I should invest in a 401k even if my company doesn’t provide a match?
on 15 Mar 2007 at 11:09 am2Puleen

I live in Canada but work for a company headquartered in the US. After reading this, I realized the benefit of making use of this contribution and matching model.

For the past two years I’ve really been loosing out on the free money! Shame on me. This is going to change.

Thanks a bunch for this great piece of information.

Cheers!
on 01 Jul 2007 at 4:13 am3koowo

真是太喜欢了！
very good!

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