by the company belongs to you until you are fully vested.

Your employer will explain all of the details of your 401(k) plan before you must make the decision whether to enroll or not. The good news is this: more and more companies are automatically enrolling you so that if never contribute a penny you could get profit sharing of 3 or 4 percent of your salary added to your account per year.

In addition, most plans will allow you to contribute a certain percentage of your salary per pay period and that money will not be subject to federal government tax. This means if your plan allows you to contribute 10% and you choose the maximum amount, then your $50,000 salary is effectively reduced to $45,000 as far as the IRS is concerned. The less that you have, the less you’ll be taxed. Best of all, the “missing” $5,000 is fast at work in your interest earning retirement account.

It gets even better than that: many companies will match your earnings. For example if you kick in a dollar, the company will add in 50 cents up to a certain amount. So, for every dollar you earn, you get a 50% return, not including profit sharing. Do you know of any other place where you can earn 50% on your investment? Nothing legal, that is!

So, open up your retirement account as soon as possible and watch the funds flow in with your company match and profit sharing and your personal tax free contributions.

Joseph is the proud owner of Finance Guide, a website that willexplain everything you need to know about Personal Budgets. We invite you to visit our site today and see what we have to offer.

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