I don’t remember when I got my first 401k but it had to be a long time ago. So, maybe you can gain from what I learned. There are many things I learned from many different aspects. However, there are two things I need to say before I go into it.

First and foremost, it is quite plausible that you can benefit from the plans. Actually, both my wife and I have. However, it is in spite of the system rather than because of it.

Second, all expertise I have, or at least for the most part, is from the college of hard knocks. You just may benefit from it.

Now, the first and most important thing I need to say is that there are real possibilities of losses. I know. They do caution you about this before you sign on the dotted line. However, what they don’t tell you is that once you take out a 401k agreement, you have, in essence have agreed to help hold up the stock market.

Let me explain. Over the years, the stock market took nose dives and leveled off. Then it gradually started going back up. Why shouldn’t it go that way. People like me were underwriting the stock market. We kept our money in, which, as you can imagine, helped the stock market to hold it’s value.

It would appear that the feds have discovered a way to keep the market from crashing, the 401ks. In case you haven’t noticed, it works. Though the market has threatened, it has never crashed since the 401k. Aren’t we all having fun playing Atlas holding the financial world on our shoulders.

Now why is it that we are doing this? Is it out of the goodness of our heart? Of course not. We keep our money in the accounts for two reasons, which the gov was careful to put in there. First, there is a penalty, a substantial one, which they make sure we know about. It is about the same as a threat, you know.

However, if that is not enough, the IRS will take a chunk too. Naturally, the amount is dependent is on a number of things. What tax bracket you’re in, how much you withdraw, and how many tax dodges your accountant can come up with.

So. If you lose your job, then you lose your car, then you lose your house, you make sure to keep that money in the account to keep from paying the penalties. It’s okay. You can buy a good tent with what you get from your wife’s wedding ring.

Okay. I’m am painting an extreme picture. However, it is to get your attention. I just want to get through to you that once you put a dollar or two in the system, it can be difficult to get it out, no matter how much you need it. The Feds don’t really care how much Tiny Tim needs that expensive operation, you see.

They do want you to keep it in there. Imagine if you will, the stock market takes a dive. The next day, all those with 401ks pull their dollars out and the market collapses faster than the Trade Center Towers.

I know. A bad comparison. I realize it. However, I won’t apologize. It could have nearly the same results. May I remind you, people were throwing themselves from buildings in the great depression too.

The point is this, before you set up your 401k account, be aware as to what might happen. It will be difficult to get it back out… and you might want it back out.

Secondly, be aware that your money just might be going to finance things you really don’t like. For instance. you might be one of those who now has a bad taste in your mouth out of what Disney has been doing. For sure I do. And, right now, I have money behind that outfit and I don’t like it one bit. However, I can’t do a thing about it, that is, unless I am willing to take a big loss. Too bad for me. I should have thought about that before I put my money in the account. I cannot tie an instruction on my money, this dollar must not go to Disney.

Then too, a little over a year ago, I decided to buy a new electric car. I could have paid cash for it, if I took the money out of my account. However, the instant I did that, I would have had to make a big check out to Uncle Sam, specifically, to IRS. So, instead, I am paying 9% interest on the car loan for 8 years. Now isn’t that neat. I have all that money sitting there in an account and I can’t pay cash for a car.

They want you to keep your money in that 401k, don’t you know. (They) being the federal government.

Remember, I am not making suggestions. I am just letting you take advantage of my mistakes.