According to this plan, the enterprise will set up a special account of 40 1K for employees, and employees will take out a certain percentage of their salary and deposit it, while enterprises will generally deposit a certain percentage (not exceeding the amount deposited by employees). At the same time, enterprises provide employees with three or four different portfolio investment plans.
1.40 1K plan funds can be invested in financial products such as stocks, funds, annuity insurance, bonds and special time deposits. Employees can choose their own investment methods, and the investment risks are borne by employees. Usually, employees of large American companies are more willing to buy shares in their own companies.
2. The employee account 40 1K is pre-tax income, and the income deposited in 40 1K in that year does not need to be taxed. Of course, it is not tax exemption, but deferred tax payment, because you still have to pay taxes when you withdraw 40 1K at retirement.
3.40 1K pensions are all invested by the employer, and employees can also deposit part of their wages into the 40 1K account. Because of the delay in paying taxes, the federal government has limited the proportion and total amount of 40 1K investment, and the total amount of deposits is increasing every year. The deposit limit of 20 19 40 1K is $19,000.
4. When employees retire, they can choose to collect the funds in their accounts at one time, collect them by stages or convert them into deposits. After employees in private enterprises retire, enterprises will no longer bear the cost of their pensions, which can effectively reduce the human resource cost of enterprises. 5. If an employee resigns after establishing a 40 1K account, the employee can move the account to a professional financial institution for management. Of course, if the employee finds a new job, the employee can transfer the 40 1K account to the new company, but only charge a certain management fee.
6. Some people regard the domestic personal tax deferred pension insurance as China's 40 1K plan. If it is officially implemented nationwide, its scale will be much higher than that of the United States.