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4 . You choose the amount you want to contribute: You have the option to contribute the amount you feel you can afford to your 401K plan, up to the maximum allowed by the government. This maximum contribution limit is quite generous and is scheduled to increase each year through 2006.
5 . Employers match contributions and your account belongs to you: Most employers match 50% of an employee’s contribution to a 401K plan. This matching could have a limit on the percentage your employee will match. For instance, you might be able to con- tribute 10% of your earnings to your 401K plan and your employer might match the entire 10% or a lesser percentage.
If you should change jobs, your money in your 401K plan can be rolled over to your new employer or to an IRA. Changing jobs doesn’t mean you must cash in or lose your 401K plan.
Questions You Should Ask
When you start a new job, be sure you find out:
1. When you will become eligible for the 401(k) or employee- participating retirement plan;
2. The percentage that will be deducted from each paycheck;
3. How and when you can change the amount you contribute;
4. How you can change the funds your money is invested in;
5. How and when you can stop making contributions at all if you so choose;
6. What is the vesting (the portion that the employer contributes to your plan) schedule;
7. Whether the matching contribution is in the form of company stock or cash;
Where Should I Save My Money? 65