Wise to Participate in 401(K) Plan

Staten Island commercial bank likes reasons to partake



STATEN ISLAND, N.Y. – It's a fortunate staffer who can participate in an employer-sponsored retirement plan.


Victory State Bank, Staten Island's only community-based business bank, asserts that it's an unwise worker who might be ignoring what the employer may be offering.


A good retirement plan will allow deferring taxes on whatever is contributed to a 401(k) account until withdrawals of the money begin, presumably in retirement.


The amount of money contributed is deducted from the worker's salary when Uncle Sam is tallying the employee's taxable income for the year.


Granted, the money contributed typically won't be available until the account holder retires, but committing to a plan like this is one way of both saving on taxes and forging way to save for the future.


“If your company offers any kind of a 'match,' meaning it will throw in some money to match your contribution at a certain proportion, you are definitely leaving money on the table by not participating,” says an advisory from the National Association of Enrolled Agents (NAEA).


For example, a company may match 50 cents on one dollar up to 4 percent of pay — yours could be better or worse.


Enrolled agents (EAs) are licensed by the U.S. Department of Treasury after passing a stringent three-part exam on taxation. They must complete IRS-approved continuing education to keep the license.

One primary reason a retirement account is espoused by NAEA as a good idea is compounding interest. Add earned interest to the money you are contributing, plus an employer match, deduct the amount contributed from your taxable income, and you’re well ahead of the game, the group points out.


Most 401(k) plans allow you to choose how to invest your money. The plan administrator provides a choice of investments, which may include cash equivalents, bonds, stocks or a mix. When choosing the investments, NAEA says you can decide exactly how aggressive or conservative you wish to be.

IRS increased the contribution limit for employees who participate in 401(k) plans from $17,500 in 2014 to $18,000 for tax year 2015. The catch-up contribution limit for employees aged 50 and over who participate in 401(k) plans increased from $5,500 to $6,000, which is motivating to many baby boomers who are behind in saving for retirement.


A catch-Up contribution is a type of retirement savings contribution that allows people over age 50 to make additional contributions to their 401(k) and/or individual retirement accounts.


About Victory State Bank

VSB Bancorp, Inc. (OTCQX: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island: The main office is in the community of Great Kills, and branches are in the communities of West Brighton, St. George, Dongan Hills and Rosebank. For additional information, Victory State Bank may be reached at 718-979-1100 or visited online at www.VictoryStateBank.com.


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