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Chapter 1. What Is a 401(k)? > Why Should I Participate? - Pg. 10

What Is a 401(k)? 10 · Keogh plans--Also known as HR 10 plans. For self-employed people (when the employer and the employee are the same). Keogh plans allow contribution and tax deductions up to 25 percent of pay, to a maximum of $30,000. The rules can be complicated. In 1998, we predicted that 403(b) and 457 plans would look just like 401(k)s within five years. Well, we were a little off because it will happen in 2002. How Can I Tell If My Company Has a Good 401(k) Plan? Seems like a good time for a test. If you can't answer the following questions, you may be the problem, not your company. Notice that there's no "I don't know" category. That's because you should know the answer to these basic questions. Here's our advice: If you get stuck and can't answer more than two of the questions here, first, finish this book. Second, do some research into your 401(k). Third, retake the test. Your test results will be meaningful and, more importantly, you'll get an answer to your question. Answer these questions, circle the value, and add the total: 1. 2. 3. 4. 5. Does your company offer a 401(k) plan? Yes (25) No (0) Does your company match your contributions? Yes (25) No (0) Does your company provide a pension, profit-sharing, ESOP, or other type of protective shell? Yes (25) No (0) Can you enroll in your 401(k) after six months of service or less? Yes (25) No (0) Does your company allow you to invest company 401(k) matching contributions? Yes (25) No (0)