The most important function of money is to serve as a medium of exchange. As a medium of exchange, money removes all the difficulties of barter. There is no necessity for a double coincidence of wants in a money economy. The man with the cow, who wants to purchase a horse, need not hunt for a horse-seller who wants a cow. He can sell his cow in the market for money and then purchase a horse with the money thus obtained. The convenience is very great when the person has to sell his services or goods in an unfinished state, which no consumer in the narrow sense wants. They can be easily turned into money, the general purchasing power.

Furthermore, in a money economy it is easy to compare the relative values of commodities and services, which are dissimilar and entirely different from one another. The values are in proportion to their respective prices. Expression of values in prices enables us to add them up and have a definite idea of a person's or a community's wealth.

Money also serves as a standard of payments made after a lapse of time. Lending and borrowing, therefore, must take place in terms of a commodity that will, reasonably speaking, keep its value stable over time. Most commodities deteriorate with the passage of time. But if the money material is properly selected and managed, its value can be kept more stable than that of other articles. By serving as a standard measure of payments over time, money makes borrowing and lending much less risky. Thus, it helps in stimulating all kinds of economic activity, which depends on borrowed money or credit.

Money serves as a store of value or, more correctly, it enables a person to keep a portion of his assets liquid. Liquid assets are those that can be used for any purpose at any time one likes.

The IRS has imposed certain limits on the amount that can be contributed to an individual?s 401(k) plan account in a year. The IRS also decides the maximum pre-tax amount that can be contributed to this plan. For the year 2005, a maximum limit of $14,000 pre-tax contributions made to employer sponsored plans were set up. The maximum pre-tax contribution limit is slated to be $15,000 in the year 2006. These contribution limits are the outcome of the Economic Growth and Tax Relief Reconciliation Act of 2001. The maximum pre-tax contribution limit, in post-2006 period, is indexed in $500 increments for inflation. Even if one works for more than one employer these is the IRS pre-tax limit for a particular year. The IRS has also fixed maximum limit for the aggregate sum that may be contributed to the 401(k) account by all the sources. This not only includes any employer matching or profit sharing contributions as well as any employee after-tax contributions.

As far as the catch-up contributions are concerned, if one is expected to reach age 50 or older the limit for additional catch up contributions $4000 in the year 2005, it is $5000 in 2006. After year 2006, these limits will be subject to cost of living adjustments commonly known as "COLA." It is important to note here that at the end of the calendar year, if an employee's your regular pre-tax contributions have not exceeded the Plan contribution limit or the IRS annual dollar limit, some or all of the employee's catch-up contributions could be treated as regular pre-tax contributions. The contribution limits have been devised in such a way that the employers do not discriminate to favor the highly compensated employees.

The online banking trend has caught up quite fast with bank customers in recent years. Even traditional, and oftentimes rigid, banking institutions are now pushing their websites and online presence through heavy advertising and promotions.

In a world that is becoming dependent on Information Technology for commerce and other activities, it pays to be at the top of developments. And in this case, it means having an online presence.

People all over the globe are looking to the Internet to make their lives easier. And online banking is just one way to simplify many things like managing financial resources, investments, bill payments, and money transfers, among many others. It also helps that people with Internet bank accounts earn a higher Annual Percentage Yield than those who still go to a branch to deposit or withdraw their money.

The Best One for You

An Internet bank account should be able to work for your convenience. The least a bank can do for you is give you interest for your savings. And even with this service, you still have a lot of choices among the different APY rates available.

Advancements in Information Technology have enabled many breakthroughs in terms of service and business possibilities. When choosing an Internet bank, consider the capabilities of the institution to harness and make use of these possibilities. There is no use in getting an online account when your transactions are processed at the same rate that they would be if you visited a bank branch.

Remember that with an Internet account, you have entered a borderless world of possibilities. You can engage in multiple investment plans, monitor your savings interest rates, transact business anywhere in the world, manage your forex, and transfer money as fast as you want it, among many other advantages. So be sure to choose an Internet bank that can guarantee this kind of seamless service.

The views of the economists about the nature of money have undergone changes during the past century or so. The early classical economists, for example, gave little importance to the role of money as a causative factor in the national economy of a country. They looked upon money as an unimportant and passive factor in the operation of the economy.

In modern times, however, the conception of money has undergone a change. The modern economists disagree with the classical view that money is a passive and insignificant factor, that monetary disturbances are rare and that they automatically correct themselves with the lapse of time. According to the modern economists, money plays a leading and decisive role in determining the level of economic activity in a country.

Money, according to them, is a powerful instrument, which controls and regulates the level of general economic activity in the economy. The supply of money, for example, has significant effects upon the total volume of investment, output, employment, distribution and consumption of wealth. An increase in the supply of money, for example, may lead to greater investment, output and employment.

An excessive increase in the supply of money may result in hyperinflation, rising prices and growing shortages in the economy. A decrease in the supply of money, on the contrary, may produce just the opposite effects on the national economy. It may result in deflation, falling prices and falling production. Both inflation and deflation have far-reaching effects not only on the production, but also on the distribution of income and wealth in society. Furthermore, money is a liquid asset, which can be easily hoarded as a form of wealth.

Hoarding and dishoarding of money can have important and far-reaching effects on the working of the economy. Large-scale hoarding of money on the part of the public will result in a diminution of the money supply, with all the attendant consequences. A sudden and large-scale dishoarding of money will surely have inflationary effects on the economy.

There are certain rules that govern the operation of a 401(k) plan. Rules and regulations for 401(k) plans are established by the US tax advertisement code. The Employee Benefits Security Administration of the U.S. Department of Labor regulates the operation of these plans

One of the rules put a certain dollar limit on the amount an employee may decide upon to defer each year. There are certain other limits also that may apply to the amount that an employer may have to contribute on your behalf. The employers, if they desire, can make a matching contribution to a 401k plan. But it is not mandatory for them to make any contribution. The money deposited in an individual employee's 401K plan is generally not allowed to be withdrawn till retirement.

Though it is a retirement plan but in certain circumstances an employee may be allowed to utilize some of the funds collected under this plan. Every individual has a separate 401k plan account. Before final withdrawal, an employee does not pay any taxes on this fund. When at the time of retirement one withdraws the money from this account, then that amount is taxed as an ordinary income. Under the rules and regulations governing this law, if low compensated employees do not contribute enough by the end of the plan year, then the limit is changed for highly compensated employees. These and some other provisions ensure that the employers are encouraged to make this option not only to the highly compensated but other employees also.

There have been certain changes in rules and regulations that govern execution of 401K plans. The maximum before tax contribution limit is also changed from time to time. This limit is also subject to the catch up provision that is available to employees who are more than 50 years old.