When Changing Jobs Don’t Forget Your 401(k)

Posted by admin on Oct 29, 2009 in Savings | 0 comments

Moving on to greener pastures in your career is always an exciting experience, but if you’re not careful you could end up with a lot less green in your retirement portfolio. How you handle the funds in your 401(k) could mean the difference between a happy and secure retirement and a hefty tax bill. Knowing the right moves to make now will help protect your funds well into the future.

Those who are changing jobs typically have three options at their disposal when it comes to their 401(k) plans:

1)       Leave the 401(k) account with the current employer

2)       Roll the money over into a self-directed IRA plan

3)       Roll the money into the new employer’s 401(k) plan

4)       Cash out the funds

Unless you have already reached retirement age the fourth option should not even be a consideration. That is because taking the money out of a tax sheltered investment like a 401(k) plan can trigger huge tax penalties. Workers who take this option may find that a large chunk of their savings has disappeared into thin air. And in addition to the tax penalties, the money taken out will not be subject to ordinary income taxes, further depleting the value of that important investment.

Tips for Getting Your Retirement Plan Back on Track

Posted by admin on Oct 20, 2009 in Featured, Savings | 1 comment

Depending on the ideal asset allocation now may be a good time to sell some of those fixed income investments and buy stocks with the proceeds. Many people have seen the percentage of fixed income investments soar as the prices of stocks have come down. Purchasing additional equity positions can put the overall portfolio back in balance and set you up for the next run up in stock prices.

Of course this advice is best suited to those with a long time horizon and plenty of time before retirement. Workers who are closer to retirement may find that the stock market crash has done their asset allocation for them – as retirement nears most workers will want to move more assets into fixed income investments and less into the stock market. Workers who have took no action while stocks were falling may find that bonds and other fixed income investments already make up a much higher portion of the portfolio than they used to.

Get Into the Savings Habit

For all workers now is a great time to ramp up savings. With job losses still on the rise and not expected to peak for quite some time, now is not the time to become complacent about savings. Workers should have – at a minimum – six months worth of living expense put away in a savings account, bank money market account or similar rock solid investment. Having cash readily available can lessen the sting of a job loss and make it easier to focus on finding a great new job.