Stay alert and smart about your retirement dollars

A lot of people have a 401K plan through their employer.  Basically, a 401K plan is a savings account specifically for retirement.  Because it is for retirement purposes, the federal government allows you to defer paying income tax on 401K savings.

A 401K has many options depending on your changing employment situation.  If you leave your job, you can still leave your 401K with your previous employer, or move it to your new employer.  Also, you can choose to transfer the money into an IRA.  You can even pay the taxes and pull out what’s left for any use at all.

·When you experience a change in employment, review your new company’s rules as to 401K plans before deciding to move your 401K or leaving it with your former employer.

·Review the growth possibilities and investment strategies.

·Compare your current 401K to an IRA to determine what is best suited to your needs.

·Roll your 401k into the plan with the best growth potential for your money.  Liquidation is not a good idea.

·If your previous employer’s 401K is better than your current employer’s options, leave it with your previous employer.

·Determine if there is a matching plan.  Many employers will match your payments.  This effectively doubles your investment.

·Don’t invest in company stock and don’t put all your eggs in one basket.  Diversify your investment options.

·Calculate your maximum investment options in your 401K.

·Mutual funds often offer 401k investment alternatives.  Talk to an investment professional about what mutual funds can benefit your situation.  Inquire as to whether the mutual fund provides the choice of investment in a self directed Individual Retirement Account.

·When making financial investment decisions always look out for hidden fees and check on the credibility of the company making the offering.

Thoroughly research a 401K before switching into one.  Do your due diligence and track the performance of the fund.  There are many websites devoted to this sort of trace.  Find one and check the performance of the 401K you are considering.  Compare this to the performance of the 401K you are still holding with your previous employer.  You may want to leave your money where it is now.

Keep track of your money – see how and what it is doing.  The Internet offers many tools for financial tracking.  Learn about these utilities and use them to help you make wise choices with your money.  Remember that a fool and his money are soon parted.  Too many retires and middle-class consumers have lost their life savings in this economy.  Don’t even imagine you become one of them.  Always stay alert and smart about your retirement dollars.