Why I'm Not a Fan of 401(k)s

Employees love their 401(k)s, but love can be blind. These plans are riddled with traps, restrictions and caveats that are not apparent until you attempt to access your money out of the plan. Retirement savers need to open their eyes to some serious flaws built into these accounts.

A 401(k) is a type of employer-sponsored retirement savings plan utilized in for-profit organizations. Related types of plans are the 403(b), used in not-for-profit and education, and 457 plans, designed for government employees. While all different, each is categorized as the same type of plan, designed for participants to save for retirement.

First, the Good

The good news with these accounts is that they are an easy way to save for retirement. Through payroll deductions, you can set a percentage to be taken from your paycheck and deposited into the plan for your retirement. Often this contribution can be tax deductible, reducing your current year tax liability.