Students learn a lesson about 401(k) plans, also referred to as 401K, their tax benefits, employer matching, and how they grow with compound interest in this essential retirement savings guide. They explore what a 401(k) is and how it helps save for retirement.

The lesson covers the benefits like tax advantages, employer matches, and the power of compound interest. Students also understand the basics of 401(k) contributions, including limits and conditions for withdrawal. This information helps them make informed decisions about starting and growing their retirement savings early, taking full advantage of employer benefits and pre-tax contributions to secure their financial future.

CONCEPTS

Use this video lesson on the topic of 401(k)s. Learn basic related concepts of

• Retirement Savings
• Tax Benefits
• Employer Matching
• Investment Growth
• Saving and Investing
• Tax Planning
• Employment Benefits
• Risk Management
• Financial Planning

GRADE LEVEL

9-12th grades. High School. Adult Education.

TIME REQUIRED

30-45 Minutes. It may be necessary to adjust the lesson plan and allocate more or less time to certain topics, depending on the needs and interests of the students. More in-depth lesson plan below will be longer.

PROCEDURE

Hand out the worksheet below (see the GET LESSON button near the bottom of the page).

Show students the video and have and have them complete the worksheet.  Review the questions on the worksheet.  For a more in-depth lesson, complete the lesson plan below.

What is a 401K?

After watching the video, ask students to summarize the main points made in the video.

 

Lesson Plan: Understanding 401Ks

 

Objective:

• Students will understand the basic concept of a 401(k) plan.
• Students will recognize the benefits of starting a 401(k) early, including employer matches and tax advantages.
• Students will discuss the implications of early withdrawals and tax benefits.

Materials Needed:

• Video: “What is a 401K?”
• Projector or smartboard for video display
• Worksheets for activities
• Computers or mobile devices for quiz taking

Lesson Duration: 50 minutes

Procedure:

1. Introduction (10 minutes):
   • Begin the class with a brief discussion on personal finance and the importance of planning for retirement.
   • Introduce the 401(k) as a popular retirement savings tool, highlighting its relevance to students’ futures.
2. Video Viewing (15 minutes):
   • Show the video “What is a 401(k)?”.
   • Encourage students to take notes on key points, especially on tax benefits and employer match.
3. Discussion (10 minutes):
   • Discuss the video content, asking questions like “Why is it beneficial to start a 401(k) early?” and “How does the employer match work?”
   • Explain any complex terms or concepts mentioned in the video.
4. Optional Activity (10 minutes):
   • Students will fill out a worksheet that includes scenarios where they calculate the growth of a 401(k) over time with and without employer matching.
   • Discuss the impact of compound interest shown in their calculations.
5. Wrap-Up (5 minutes):
   • Summarize key points covered in the lesson.
   • Introduce the quiz that students will take in the next class based on this video and today’s discussion.

Assessment:

• Students will complete a quiz during the next class session to assess their understanding of 401K plans and the details discussed.

Additional Notes:

• This lesson is designed to make students proactive about their financial future and understand the benefits of early investments.

Lesson Resources

• What is a 401K? A Beginners guide to Saving for Retirement