Gone are the days when company pension plans could fund a comfortable retirement. Most workers don’t even stay with one company for the bulk of a career anymore anyway. The end of the line is rapidly approaching for retirements funded, even in part, by Social Security Income contributions faithfully withdrawn from paychecks week after week. That leaves very little to fund the retirements that most Americans have worked so hard to have at some point in the future.

The 401k plan is the next great hope for worry-free retirement funding. It’s a way to maximize retirement investments without incurring unpleasant tax penalties – provided everyone follows the rules, of course. Contributing to a 401k provides a few benefits many employees might not realize, though, benefits that make it well worth considering.

1. Employees are only taxed on the income remaining after their 401k contributions. This means they can effectively lower their tax obligations today.
2. Many employers match some or all of employee 401k contributions. That’s free money going into employee accounts. While most employers match a percentage of employee contribution up to a percentage of your income, it’s still money employees would not otherwise have for retirement.
3. Contributed funds can be infested for tax-deferred growth. You don’t pay capital gains on the money earned through your 401k until you withdraw the funds.
4. You may be able to borrow funds from the account for specific reasons (buying a primary residence, paying for education, paying medical bills, and when you can provide substantial economic hardship). As long as you maintain your employment with the same company while repaying your loan, there are no penalties involved.