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: With interest rates at an all-time low, where is the best place to put my savings?

Answer:  Interest rates have remained near zero for so long, it is easy to forget that six years ago a money market yield was 4%.  If by “savings” you mean your short term emergency/opportunity fund, the answer is put the money in an FDIC insured savings account at your bank, or ladder the maturity on some shorter term CD’s that are also covered by FDIC … [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...]

Question: How Do I Choose a Financial Advisor?

A good start is to find someone who holds the most respected credential – CFP – Certified Financial Planner.  There are many designations in the financial world but they are not all created equal.  The CFP designation requires extensive study and passing a rigorous test administered by the Certified Financial Planner Board of Standards.  In order to maintain … [Read more...]