💵 401(k) 101
A 401(k) is primarily designed to help employees save for this stage of life.
What is retirement?
Some employers contribute money to your retirement account based on how much you contribute. This benefit is commonly called this.
What is an employer match?
Clue: With a traditional 401(k), employee contributions are generally made on this basis for federal income-tax purposes.
What is pre-tax?
TRUE OR FALSE: If you leave your job, you automatically lose all the money in your 401(k).
FALSE.
The glorious weekday activity Future You no longer has to participate in after retiring.
What is going to work? 😂
Money you put into your 401(k) is known as this.
What is a contribution?
TRUE OR FALSE: Employer matching contributions are always automatically yours from the moment they're deposited.
What is false?
Employer contributions may be subject to a vesting schedule.
Roth 401(k) contributions are made with money that has generally already been subject to this.
What are income taxes?
TRUE OR FALSE: You have to wait until you're older to start contributing to a 401(k).
FALSE.
If you're eligible for your employer's plan, starting earlier can give investments more time to potentially grow.
This magical financial phenomenon allows investment earnings to potentially generate earnings of their own over time.
What is compounding/compound growth?
This is the minimum age at which you generally can take money from a 401(k) without the 10% early-distribution additional tax, assuming an exception doesn't apply.
What is 59½?
This term describes the portion of employer contributions that you have earned the right to keep.
What is vested?
TRUE OR FALSE: Qualified Roth 401(k) withdrawals can generally be received tax-free.
What is true?
TRUE OR FALSE: You can change your 401(k) contribution rate only once per year.
FALSE.
How and when changes can be made depends on the plan.
Alex and Taylor invest the same amount each month and earn the same hypothetical rate of return. Alex starts at 25 and Taylor starts at 35. Assuming both stop at the same age, this person generally has the advantage.
Who is Alex?
If you leave your employer, your vested 401(k) balance doesn't simply disappear. One option is moving eligible funds into this type of individual retirement account.
What is an IRA (rollover IRA)?
Your employer matches 100% of contributions up to 4% of pay. You contribute 2%. Assuming you're eligible for the match, this percentage of pay is the employer contribution.
What is 2%?
With a Roth 401(k), qualified withdrawals in retirement can generally be taken this way.
What is tax-free?
TRUE OF FALSE: Taking money from a 401(k) before retirement can potentially result in taxes and an additional tax.
TRUE.
You just got a raise! 🎉 Instead of letting all of that extra money disappear into your lifestyle, increasing this by even 1% could give Future You a little more to work with.
What is your 401(k) contribution rate?
It keeps the playful “Future You” vibe while still sneaking in a useful takeaway. 💰
For 2026, this is the standard employee 401(k) contribution limit for someone under age 50.
What is $24,500?
Your employer matches 50 cents for every dollar you contribute, up to 6% of your pay. You contribute 6%. This percentage of pay would be contributed as the employer match.
What is 3%?
Traditional vs. Roth isn't necessarily about which one is universally "better." One important consideration is whether you expect your tax rate to be higher now or during this future stage.
What is retirement?
TRUE OF FALSE: If two employees contribute exactly the same amount of money each month for exactly the same number of years, they're guaranteed to finish with identical balances.
FALSE.
Investment selections, fees, returns, timing and other factors can affect the outcome.
This may be one of the most valuable things a younger saver has on their side—and unfortunately you can't buy more of it later.
What is time?