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How to Set Up Your First 401(k)

How to Set Up Your First 401(k) © (Getty Images) Young woman sets up 401(k) savings plan online. New employees have many expenses competing for their limited paychecks. Student loan bills, food, rent and utilities can easily consume a starting salary. But 20-somethings have one very important thing going for them. Young people are in the best position of their lives to start saving for retirement. Why Open a 401(k) Account? Contributing to a 401(k) plan allows you to defer paying income tax on your retirement savings. You won t have to pay tax on your 401(k) balance until the money is withdrawn from the account. Participating in a 401(k) account might also qualify you for employer contributions that will help you to build wealth faster. If you start saving in a 401(k) early in your career, the money will have decades to compound before retirement.

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