Posts Tagged ‘401k retirement plan’

401K Planning 101

Wednesday, January 6th, 2010

If you are young, and you are just beginning a career, then the idea of retirement planning may seem so very far off that it is probably the last thing on your mind right now. But if you are on the other side of the fence, and retirement is approaching faster than you can handle, then you may be trying to figure out what you can do to handle it. Regardless of which situation you are in, it is absolutely vital that you begin to prepare right now. There are so many forces that are working against you financially, and for this reason, it is vital that you begin to plan now, and you do not stop saving for retirement until long after you retire.

Do you have a 401K Plan?

The first thing to look into is whether or not your current place of employment offers a retirement plan. In the past, the only type of retirement plan was a pension plan, and pension plans were a sturdy and solid part of the everyday retirement planning process. However, because the economy is turning into a completely new beast all together, these older and more reliable pension plans are quickly and unfortunately becoming a thing of the past.

To replace the pension plans of days old, most companies are now offering a retirement savings and investment plan known as a 401k retirement plan. A 401k retirement plan is a powerful way that you can invest for your retirement over a long period of time. They usually involve investing in a number of different mutual funds as well as in company stock. When making your selection of investments, it is really important that you know how to practice diversification, meaning that you should not invest too much into one thing but instead should spread your investments out across multiple investment vehicles, like stocks, IRAs, 401ks, bonds and mutual funds. You want to make sure that your investments fall within your company and outside of the company you work for as well, because things can go bad no matter how well you think they’re going within the walls of the company you work for.

If your employer does not offer a 401k retirement investment plan, then it truly is more important than ever that you take a proactive approach to the concept of investing and saving for retirement. You are going to want to have an IRA set up, either a Roth IRA or a Traditional IRA depending on how you want to handle the taxes, withdrawals and investments.

The most important step to take when it comes to retirement planning is simply to make sure that you have a plan that you can stick to. The earlier you begin to take action when it comes to your retirement plan, the more you will be able to prepare and plan before it gets to be too late.

Photo Credits: 1

Originally posted 2020-01-08 05:03:27. Republished by Blog Post Promoter

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401k Planning

Tuesday, November 3rd, 2009

Most people have questions when it comes to 401k planning and retirement. These people often wonder what 401k planning is, how 401k planning works, and how a dwindling balance can be revived. 401k plans can be complex, but they can also be quite easy to understand with a little bit of preparation.

What is 401k Planning?

A 401k is a retirement plan sponsored by an employer. Employees can contribute some of their income to their plan before taxes. The maximum amount of the contribution can be limited by the plan or by the federal government. Once the employee goes into retirement, their distribution is going to depend on how much the plan has grown over time. Because of this, employees should choose their investment choices carefully. Once they begin to take distributions, the withdrawals will be taxed. If the money is withdrawn before the employee reaches the age of 59 and a half, then there will be a withdrawal penalty.

Plan for your retirement.

How does 401k Planning Work?

If a company does offer a 401k retirement plan, then the employee usually has some option to select their investment funds based on a list provided by the 401k planning company. The employee’s contribution is going to be deducted automatically from the employee’s paycheck before taxes are taken out. Each employee is allowed to contribute up to a certain percentage, and some employers will match this percentage. The contributions that are made along with matching funds are invested into the employee’s funds. Sometimes loans can be drawn out of 401k plans, and some hardship withdrawals are also permitted. There is also a vesting period where an employee must be employed for a defined number of years before the money in their account is actually their own.

How is a declining balance repaired in 401k planning?

The first thing that you should do in order to address a declining balance is to look more closely at the investment mix that you are working with. If you invest too heavily in company stock, this can cause significant problems if the company ever faces financial troubles. Contributions should be adjusted in order to make the most out of contribution limitations, and the maximum tax deferred contribution should be made whenever possible. At the very least when this is not possible, employees should contribute enough to gain matching funds from the company.

How can a 401k portfolio be best balanced?

Balancing your 401k planning portfolio is important because it shows you whether or not your investments are on track with your game plan for retirement. If you are wondering whether or not you need to rebalance, it may be time to consider your goals, your risk tolerance and any other concerns that you have alongside a financial advisor. Some of the things that will dictate the next steps in your 401k planning process include age and how close you are to retirement. Your 401k planning process will involve investments for growth and investments for income.

Photo Credits: 1

Originally posted 2020-11-05 05:09:37. Republished by Blog Post Promoter

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