Question 1

How much should I contribute to my 401(k)?

Accepted Answer

At minimum, contribute enough to get your full employer match—that's free money. Ideally, aim for 15-20% of your income including employer match. The 2024 contribution limit is $23,000 ($30,500 if you're 50+).

Question 2

What's the difference between Traditional and Roth 401(k)?

Accepted Answer

Traditional 401(k) contributions are pre-tax, reducing your taxable income now but taxed in retirement. Roth 401(k) contributions are after-tax, but withdrawals in retirement are tax-free. Choose based on whether you expect higher taxes now or in retirement.

Question 3

How does employer matching work?

Accepted Answer

Employer matching means your company contributes money to your 401(k) based on your contributions. A common match is 50% of your contributions up to 6% of salary. If you earn $75,000 and contribute 6% ($4,500), your employer adds $2,250—that's a 50% instant return.

Question 4

What happens to my 401(k) if I change jobs?

Accepted Answer

You have several options: leave it with your old employer, roll it into your new employer's 401(k), roll it into an IRA, or cash it out (not recommended due to taxes and penalties). Rolling into an IRA often provides more investment options.

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