According to a CNNMoney.com article, some financial advisors believe that employees would be better off saving for retirement on their own and point to factors like long-term capital gains taxes paid on stocks or mutual funds, as well as ordinary income tax rates of between 28 and 35 percent, in support of this belief. However, the article’s author and NADART’s own experiences in the retirement plan industry prove that this is not the case and that investing in 401(k) plans is beneficial.

The article uses the example of an initial $10,000 invested in a 401(k) plan over a 20-year period with an average annual return rate of 8 percent. Given these parameters, your balance would grow to around $46,610. Even assuming you’re in a 28-percent tax bracket upon retirement, you still walk away with almost $34,000 after taxes. By contrast, with non-401(k) investments that initial $10,000 would be taxed immediately, leaving less for you to invest. Plus, you would have to pay taxes on any dividends or gains over that 20-year period. All told, your balance upon retirement would be just under $29,000.

An added benefit to a 401(k) plan is that many employers offer matching contributions for those employees who contribute to the plan. The employer match and the additional income earned is something not available through non-401(k) investments. This larger retirement account balance is yet another thing that makes 401(k) plans more attractive to employees then trying to invest on their own.

Whether you are a small business owner or large, if you are interested in starting a NADART retirement plan, please contact one of our representatives at (800) 462-3278, ext. 7161 or e-mail nadart401k@nada.org.