As a recruiter, I inform my clients it is important that you take the time to review your 401(k) plan and make any changes that fit your needs. Lets discuss some important concepts you need to know for reviewing your 401(k) plan.
When is the last time you reviewed your 401(k) plan account or made any changes to it? If it’s been a while, you’re not alone. 73% of plan participants spend less than five hours researching their 401(k) investment choices each year, and when it comes to making account changes, the story is even worse.
When you retire, if you have balances in your 401(k) plan, you will receive a Participant Distribution Notice in the mail. This notice will show the current value that you are eligible to receive from each plan and explain your distribution options. It will also tell you what you need to do to receive your final distribution.
- Watch for your Participant Distribution Notice and Special Tax Notice Regarding Plan Payments. These notices will help explain your options and what the federal tax implications may be for your vested account balance.
- Use the Company Online Beneficiary Designation to make updates to your beneficiary designations, if needed.’
Note: Generally if you voluntarily terminate your employment, you will not be eligible to receive the annual contribution.
When faced with a problem or challenge, many of us are programmed to try to figure it out on our own rather than ask for help. The Christmas Eve ritual of assembling toys without looking at the instructions and that road trip when we refused to stop to ask for directions come to mind. But when we’re talking about 401(k) investing, choosing to go it alone rather than get help can really hurt.
Over half of plan participants admit they don’t have the time, interest or knowledge needed to manage their 401(k) portfolio. But the benefits of getting help goes beyond convenience. Studies like this one, from Charles Schwab, show those plan participants who get help with their investments tend to have portfolios that perform better: The annual performance gap between those who get help and those who do not is 3.32% net of fees. For a 45-year-old participant, this could translate to 79% more wealth at age 65 just because they didn’t try to go it alone. That’s a pretty big difference.
Getting help can be the key to better results across the 401(k) board. A Charles Schwab study found several positive outcomes common to those using independent professional advice. They include:
- Improved savings rates – 70% of participants who used 401(k) advice increased their contributions.
- Increased diversification – Participants who managed their own portfolios invested in an average of just under four asset classes, while participants in advice-based portfolios invested in a minimum of eight asset classes.
- Increased likelihood of staying the course – Getting advice increased the chances of participants staying true to their investment objectives, making them less reactive during volatile market conditions and more likely to remain in their original 401(k) investments during a downturn. Don’t try to do it alone.
Get help with your 401(k) investments. Your nest egg will thank you.
If you are still confused or have questions regarding your 401(k) plan, you can reach out to us at TechStaffer.
If you want to know if your eligible for your pension plan, visit https://techstaffer.blog/2020/01/08/eligible-for-your-pension-plan-here-is-how-you-calculate-it/
If you need cash and are considering 401(k) in-service withdrawals or borrowing, visit https://techstaffer.blog/2020/01/07/need-cash-consider-401k-in-service-withdrawals-borrowing/
For more information on AT&T job postings, visit https://techstaffer.blog/2020/01/31/att-surplus-job-ideas/
- The Retirement Group or www.theretirementgroup.com
- “Retirement Plans-Benefits & Savings.” U.S. Department of Labor, 2019, www.dol.gov/general/topic/retirement.
- “Generating Income That Will Last throughout Retirement.” Fidelity, 22 Jan. 2019, www.fidelity.com/viewpoints/retirement/income-that-can-last-lifetime.