Overview
- Ramsey tells employees to join workplace plans immediately when a match is offered, calling the match an “instant 100% return” and “free money.”
- The IRS describes a 401(k) as a profit‑sharing plan feature that lets employees divert wages into individual accounts.
- Elective deferrals are generally excluded from taxable income unless designated as Roth, and qualified Roth withdrawals in retirement are tax‑free under IRS rules.
- Contributions are taken directly from paychecks, and pay stubs show both the worker’s deposits and any employer match, according to Ramsey.
- Ramsey notes many plans limit investment choices to a small menu of mutual funds, and he cites research that most millionaires regularly contributed to their workplace 401(k).