I recently changed jobs. Is there anything I need to do with my 401k plan?

Answer: For most people the answer is to rollover your 401k when you leave an employer. If you leave it behind it is often neglected. You forget how it is invested, or the employer changes plans and your money ends up in cash instead of invested. It is important to take care of your 401k, and moving it when you leave a job is usually the right answer. You … [Read more...]

Question: Should I take money out of my 401k to pay for my child’s college tuition?

Answer:  We don’t recommend it.  Your 401k needs to be all about your financial security in retirement.  It is not a savings account or emergency fund.  Many employers do offer a loan provision, but you need to know about potential pitfalls in taking out a 401k loan. The loan must be paid back through after-tax payroll deduction.  If you are unable to … [Read more...]

Question: How Much Should I Be Contributing To My 401k Plan?

Answer:  The maximum contribution to a 401k plan in 2014 is $17,500 per year.  For participants who will turn 50 years old or older in 2014, there is an extra allowance of $5,500 called a “catch-up” provision.  This brings your total contribution limit to $23,000 in 2014 and this is over and above any contribution your employer may make such as a matching … [Read more...]

Question: My company has a long list of investment choices for my 401k. How do I know what to choose?

Answer:  Your 401k is really important money because for most employees the pension plans are gone.  Your 401k is the main account to save for your retirement.  It needs to be nurtured and protected from your first day of work to your retirement day.  When it comes to investment choices, take a look at the index fund options in your plan.  They should be the … [Read more...]

Question: Should I change my 401k deferral from the pre-tax contribution to the ROTH option?

Answer: It depends.  The benefit of the pre-tax contribution is that it immediately reduces your income taxes when you make the contribution.  It reduces your tax withholding on every paycheck so some of your contribution is actually coming from money which would otherwise go to the state and federal government.  When you receive the benefits later in life … [Read more...]