Posts Tagged ‘401K’

How Do I Handle 401 (K)’s Of People Who No Longer Work For Me

Tuesday, June 26th, 2018

Trying to find people who no longer work for you, or moved and didn’t provide a forwarding address can be a daunting task.The Pension Benefit Guaranty Corporation (PBGC) may be able to help. Although the PBGC is primarily about safeguarding DB plan benefits, they said in December 2017 that they will now grant access to their missing-participant database to defined contribution plans terminating in 2018 or later, and to affected participants.

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What are some of the reasons people don’t participate or don’t contribute enough?

Thursday, May 17th, 2018

That has been the subject of recent research by the Pew Charitable Trusts. They looked at employer and employee perspectives on saving, and made some interesting findings. For example, 2/3 of employees at small to mid-sized companies have access to a retirement plan at work, and 68% participate. That translates to 45% of workers at small to mid-sized businesses participating in a 401(k) or similar plan — and 55% not participating.

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When Employees Retire Matters to Them… and to Employers

Wednesday, May 9th, 2018

Americans pride themselves on making their own decisions, and when to retire is an important one. But it takes money to retire, and the shift away from traditional pension plans leaves many Americans ill-prepared to retire when they want to. Employees who struggle with their finances find it challenging to save enough to retire on their own terms.

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Have a 401K Plan at a Former Employer?

Tuesday, April 10th, 2018

You may have had multiple jobs over your career, and left behind retirement account balances — critical building blocks for your retirement. Here’s a short guide to your options of what to do with a retirement account left with a former employer:

Roll it over to an IRA
• A rollover IRA allows you to continue any tax-deferred growth.
• A direct rollover IRA helps you avoid current taxes and early withdrawal penalties.
• You retain flexibility to select investments that fit your specific needs.
• A rollover IRA allows you to consolidate your retirement assets in one convenient place when you change jobs or
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Saving for health care with your 401K

Wednesday, March 21st, 2018

There is a lot of misunderstanding about what Medicare will and won’t pay for retirees’ health care. Your 401(k) plan is a great tool for employees to use to save for these expenses, and the 401(k) meetings are a good time to discuss this topic.

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Hey, your 401(k) is not a piggy bank.

Saturday, June 7th, 2014

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With a piggy bank, you put money in and take it out. It’s a fairly simple tool, and it’s great for what it’s used for. A 401(k), on the other hand, is a great tool to save for retirement. But increasingly, they are being used as something they aren’t: piggy banks.

Recent studies show that Americans are increasingly pilfering from their 401(k) accounts. With the economy being the way it has been since the financial crisis, that’s understandable on one level, but the choice can put your retirement plans on a slippery slope.

According to the IRS, a whopping $57 billion was withdrawn prematurely from 401(k) accounts in 2011, up 37 percent in inflation-adjusted dollars from 2003. You could argue that if a person needed the money to survive, then an early withdrawal from a 401(k), even with the tax penalty, is better than most other options – to a point.

Unfortunately, younger individuals are withdrawing the most. According to a recent study, nearly 40 percent of workers between 20 and 39 cash out their plans when they change jobs.

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Being financially savvy with your 401(k) can earn you more.

Tuesday, May 27th, 2014

If ever you needed an incentive to learn more about money, this might be it. A new study shows that the more financially savvy you are, the more you’ll earn on your 401(k) plan. And not just a little bit more, a whole lot more–up to 1.3 percentage points more per year on your retirement plan investments than your less sophisticated counterparts.

In fact, being financially literate could help you build over the course of a 30-year working career a retirement fund some 25% larger than that of less-knowledgeable peers, according to the study, “Financial Knowledge and 401(k) Investment Performance,” which was recently published as a working paper on the National Bureau of Economic Research website.

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Your 401(k) can start to blossom this spring with these handy tips

Monday, May 5th, 2014

Unless you scour the voluminous info about your plan (which you should, but probably don’t) you might miss some important tips that can make a real difference in your planning down the road.  Here are seven things to bear in mind when reviewing your porfolio.

1. You can rollover.  When you leave your employer, you can transfer your 401(k) plan to an individual retirement account – and it is not a taxable event. This type of transfer is called a rollover. Many 401(k) participants think that any type of distribution from their 401(k) plan is taxable and subject to penalties. That isn’t true.

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Happy retirement: Stop worrying about paying taxes.

Monday, April 28th, 2014

When you contribute to a Roth IRA you typically don’t have to worry about paying taxes on that money or its investment gains ever again. And employers are increasingly adding a Roth option to their 401(k) plans. Aon surveyed 400 employers covering 10 million employees in 2013 and found that half now offer a Roth 401(k) plan. Here are some of the benefits
of saving for retirement in a Roth account:

Having a tax-free account in addition to your pre-tax savings gives you more options to reduce taxes in retirement.
Tax complications don’t end when you leave the workforce. In fact, your taxes in retirement can actually be more complicated than in the years when you were working. For the most part, you’ll want to withdraw money you have in taxable and Roth accounts first and delay paying taxes on your savings in traditional retirement accounts as long as possible. But it’s also possible that you could pay significantly higher taxes if you delay too long and your traditional retirement account gets big enough for required minimum distributions to force you into a higher tax bracket. With money in different pots, you’ll have a chance to run different scenarios and maximize your after-tax retirement income.

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Key questions (and answers) for Plan Sponsors

Monday, April 7th, 2014

Q: Is there a relationship between automatic enrollment and employer decisions about matching contributions and total compensation?

A: Recent research by the Center for Retirement Research at Boston College (CRR) found that auto-enrollment is related to relatively low employer match rates and default rates, but not overall compensation. The How Does 401(k) Auto-Enrollment Relate to the Employer Match and Total Compensation? report indicates that auto-enrollment plans had a matching rate of about 0.4 percentage points less than plans without auto-enrollment, even taking into account other factors.

The researchers also investigated whether low-default contribution rates adopted by employers who have auto-enrollment in their plans. It appears that employers who have this feature may be using a relatively low default rate, with resulting lower matching, to offset the higher costs that occur from higher participation rates found in auto-enrollment plans. 
The study concluded that auto-enrollment increases saving for workers who would not have participated in the plan without that provision. However, employees who would have participated in the absence of auto-enrollment may, over time, save less because of relatively low employer match rates.

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