investment. Your employer may match some or all of your investment as a
benefit to you. They do get some tax benefit for this.
Like any other investment this one is managed and those managers get their
fees - that's how they make money. Large employers might get certain
concessions or discounts from the 401k vendor depending the amount of money
being managed (so there's a little more incentive for them). The management
company benefits because they have steady cash on hand for investments -
401ks have generally serious penalties for early withdrawal (which means
that the management company LOVES early withdrawals).
If you're company (like mine) actually manages their own 401k product then
they can afford to be a little more generous with the company match as they
are really just investing in themselves. ;^)
In the end it's really not much different from a personal savings account -
you put money, they invest your money helping them to increase their profits
and getting paid their fees until you need it.
Jim Davis
From: brobborb [mailto:[EMAIL PROTECTED]
Sent: Tuesday, August 10, 2004 7:01 PM
To: CF-Community
Subject: 401k question
hey guys I don't really know what a 401k is (and never bothered to look it
up until now). I've read up on it but am still kinda fuzzy about it. Can
anyone show me an example showing real numbers. What I mainly don't
understand is, how does your employer benefit by putting "hi" money into
your 401k plan?
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