“Withdrawals before that age are typically subject to 10% penalty (as well as income taxes),” according to Wall Street Journal. Though the plan has been criticised lately for the little money, employees have managed to save. But according to USA Today, companies are rolling out more affordable and low cost plans. “The new plans are aimed at helping small and midsize employers, which in the past have been unable to offer their workers the lowest-cost plans. Their workers make up 43% of all plan participants, according to the paper.
To make it more popular among the working class, factors like individual’s age, income and life changes would be used to develop customised plan that will be modified and balanced with every passing year. Low wage employees haven’t seen many benefits as they couldn’t save and contributed less to the plan but the companies like Lincoln Trust have taken care of them as well and a low-cost plan has been launched.
Besides the tax deductions, the plan has been a hit among the employees because of its portability as they can change the plan with the change in their employers and last but not the least, an employee has the freedom to decide his investments, though they are for a long time.
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