Financial Planning, Retirement Plan, 401k, Investment Blog

Financial Planning, Retirement Plan, 401k, Investment Blog

401k

Cleaning Up Your 401(k)

Posted February 25, 2009 by Bernz

If you are like most employees who have a company-sponsored 401(k) plan, you filled out all the paperwork when you first signed up, chose your investment funds from the list provided, and proceeded to forget it from then on. In the last 12 months, it is likely that every time you take a peek at your plan, it has gone down in value yet again. Best to just not look at it and hope for a miracle, right? Wrong!

While there is not much that you can do about the global recession or the sorry state of the stock market, you can take charge of your retirement funds, especially your 401(k). Every 401(k) has an option to buy and sell the underlying investment funds every so often. You may be able to make changes to your plan every three months or even every day. Find out when you will be able to change out your investments and then take some time to know what’s going on with your existing choices.

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Posted in 401k, Index Funds, IRA, Retirement Planning, Roth IRA, Simple IRA, Traditional IRA | No Comments »

Making the Right 401(k) Choices

Posted February 3, 2009 by Bernz

Knowing which investment choices are right for you in your 401(k) plan has never been easy, but in the current economic environment, it can be downright torturous. Most funds that are available to choose from in your plan are declining in value and producing negative returns. This is also the case of the stock market as a whole. That means that your job is to select investment funds not to make the biggest return but to lose the least amount of money. Preservation of capital is tantamount during this extended recession.

Many investors make the unfortunate choice of trying to beat the stock market. However, it has been proven time and time again that, over time, managed funds rarely outperform the stock market as a whole, regardless of how talented and well-compensated the fund manager is. If seasoned experts cannot beat the market, it is highly unlikely that you will be able to. The best many investors can do is to match the performance of the stock market.  How can you choose investments in your 401(k) that will follow the stock market and preserve your retirement funds? Index funds.

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Posted in 401k, Financial Education, Financial Goals, Investing Strategies, IRA, Tax Reduction | No Comments »

The rules of 401k hardship withdrawals

Posted December 10, 2008 by Bernz

Thinking about tapping your 401K to get through tough times? You may qualify for a hardship withdrawal if you meet certain conditions. And if you do qualify, you should expect to incur a substantial financial penalty PLUS a 10 percent early withdrawal penalty if you’re younger than 59 1/2.

These are the conditions that you or someone in your immediate family should meet.

Have outstanding and un-reimbursable medical expenses (excluding cosmetic surgery). You’ll need to supply a copy of your explanation of benefits (EOB) from your insurance company showing what part of your medical expenses are covered and which are not.

Prevention of eviction or foreclosure (on your primary residence). If you are facing eviction or foreclosure you can seek a hardship withdrawal to cover the outstanding expenses necessary to bring your account current. (more…)

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What’s the BIG deal about a 401K? Think Free Money!

Posted November 18, 2008 by Bernz

Think of a 401K as a sign on bonus that comes with a job offer because if your employee benefits include a 401K plan that is essentially what you’re getting.

A 401K is a retirement investment account funded by money that comes directly from your pay check. In other words these funds are automatically deducted from your pay check and they are not taxed. After the money is entered into your 401K it can then be allocated to different types of other investments such as: bonds, stocks, mutual or money market funds.

Many employers offer to match your 401K contribution. This is where the bonus part comes in. Let’s say you contribute $75 a month to your 401K and your employer matches your contribution dollar for dollar, you’ve earned another $75. An even better part of the deal is that as long as your money stays put, it draws interest. That’s additional earnings on top of your savings. And yes, the interest earned is not taxed. Other advantages of contributing to a 401K plan include: (more…)

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The Pension is Dead, Long Live the 401K!

Posted November 2, 2008 by Bernz

A Guide to Those Born Before 1980

As everyone knows, as more and more jobs get sent overseas fewer and fewer benefits are getting handed out to workers. What is even worse is that Social Security is in grave jeopardy. Neither of these two situations are going to resolve themselves any time soon. So the IRS in their has created tax-free vehicles for the purpose of long-term investment for retirement.

The 401K is the simple tax code for it. If your employer has a matching offer make you take advantage of it fully. The old theory of always saving money becomes most important in the case of a 401K. These vehicles only work and are effective when you put money in them religiously, so keep that in mind. that 401K’s don’t have strict limits like IRA’s and you can contribute a large amount of your paycheck to them. 10% of your yearly income is very wise and at those rates by the age of 65 you will have plenty of money to retire on.

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