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401(kangaroo)?

Posted by Admin Posted on Aug 23 2016

What is a 401(k) plan?  What does the k stand for?  Is it kangaroo?  These are common questions.  We have at least some of the answers:

 

A 401k is a type of retirement plan that employers can offer their employees.  It allows employees to contribute pre-tax up to $18,000 per year ($24,000 if 50 or older).  It allows for employer contributions as well, though they are generally not required.  A 401(k) can allow employees to borrow from their own plans (repayment is usually required within five years).  Employers are required to file an annual report with the U.S. Department of Labor (Form 5500).  Use of an outside administrator is recommended. 

 

There you have it.  A 401(k) is a great way to help your employees save for retirement, and to our dismay, the ‘k’ doesn’t stand for kangaroo.  (the name ‘401(k)’ is really just a reference to a section of the Internal Revenue Code)