Five benefits of a workplace plan

Your workplace retirement plan can offer a powerful way to save for the future. You may have heard these plans called several different names, such as savings plans, retirement plans, workplace retirement plans—or 401(k), 403(b) or 457 plans (their tax code names).

Save more by taking advantage of your employer retirement plan

Most plans allow you to contribute money with automatic payroll deductions. They also offer multiple investment options. To make the plan even more attractive, many employers match part of what you save. Take a look at the benefits:

1. Convenient automatic deductions

You decide how much to put in the plan, and your employer takes it directly from your paycheck.

2. Consistent savings

You’re more likely to keep saving on a steady basis when you don’t have to think about it or take action with each paycheck. (You may want to increase your savings when you get a pay increase or extra cash.)

3. Reduce taxable income

Your employer may contribute your retirement savings to the plan from your pay before applying income taxes. This reduces your taxable income.

Note: Some employers also allow after-tax contributions to their retirement plans.

4. Tax-deferred growth

Your savings, plus any match and any earnings on your investment, will grow tax-deferred. You won’t pay taxes on them until you withdraw money from the plan.¹ If you wait until retirement to take the money out, your tax rate may be lower.

5. Employer match

Your employer may match some or all of what you save.  For example, your employer might add 25 cents for every dollar you put in the plan, up to a certain limit. The match is like free money, adding to your savings total.