Harnessing the power of compounding can help savings grow over time. Here’s how compounding works: When the money you contribute to your retirement plan generates investment earnings, those earnings are added to your account and reinvested. Together with your original investment, your earnings have the potential to generate more earnings. As the compounding process repeats itself, you potentially have larger and larger amounts of money invested.
Participating in your plan offers the opportunity for tax-deferred compounding. Your pretax contributions and investment earnings aren’t taxed while that money remains in the plan.* Deferring taxes means you can leave all your plan savings invested, boosting the potential power of compounding.
* Distributions of tax-deferred amounts are subject to income taxes unless they consist of qualified distributions from a designated Roth account.
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This publication is designed to provide useful information about retirement plans and investing your plan account savings. While the information contained herein was obtained from reliable sources, it cannot be guaranteed as to completeness or accuracy. Before acting on any of the information provided, consult your professional advisor.
FR2017-0106-0032/E ©2017 by DST