401k Advice

Frequently Asked Questions

1. QUESTION:
   401K advice???
   My company offers a 401k plan through ING.I’m a 35 yeal old male with no kids.No savings or investments for future retirement either.I have until the 30th for this cycle to decide percentages and types of investments to get involved in.I earn 0-1000 per week pretax.Any advice to get me going in the right direction???

   • ANSWER:
     Contribute as much as you possibly can. At the very least, contribute your raise percentage–you’ll never miss it since you never had it before. Make sure to contribute to the level that the company matches. A higher level is better if you qualify, but the most important is to get the free money the company matches. You’re young, so go with investments with a moderate level of risk.

2. QUESTION:
   Any advice on how to get better returns on my 401k?
   For the last several months, my 401k has been getting rocked! I’m 28 and make a solid income, so my profile is on the aggressive side …. Any advice on where I can align my $$$ in the market right now, to get a decent return? Or do I just need to tone it down until the market picks back up?

   • ANSWER:
     here’s a very basic aggressive allocation:
     15% large cap growth
     15% large cap value
     15% midcap blend
     15% small cap blend.
     20% international
     20% bonds

     if you’re allocated this way and still getting crushed .. and you still want to call yourself aggressive… then just keep steady… dollar cost average into it … rebalance every 6 months or a year back to the above allocation…. close your eyes and in 10 years you’ll be happy you didnt get conservative when things were bad…. cause if you do you;ll forever be likely to sell at the bottom and buy at the top when things are good.

     anyways…. if you want more professional direction ask if your employer;s 401k has a consultant that you can talk to about suggested models…. get his/her guidance

     cheers and good luck

3. QUESTION:
   401k advice whats the advice from investors?
   pull out?
   move to bonds?
   Stop contributing?

   • ANSWER:
     Expert advice should be tailored to your interests/needs/personality.

     (1) Keep contributing. You need to invest 7% a year or save 10% a year every year for at least 30 years to have enough to retire comfortably.

     (2) Keep investing at least some money in the stock market. “The rules” say keep on investing the same way…but if it helps you sleep at night to cut back to 50% stock…or 25% or 10%…go ahead and do it…just don’t take it all out.

     (3) Don’t make major decisions all at once. Do it in stages…you are less liking to mess everything up that way. For example, a very simple (small) change (for the short term) you can make is to change your new contributions to be 90% cash (money fund) and 10% stock…or 50% cash, 25% Bond, 25% Stock. If you are itching for action right now, this will take care of that and it won’t have much of a negative impact impact on your financial plan for years (which give you years to go back to your old plan).

4. QUESTION:
   How can I get advice on my 401K choices. Is there a website that allows me to list my employer look at advise

   • ANSWER:
     I have never actually used this site, and there IS an fee. www.smart401k.com allows you to enter the options in your plan and answer a short questionnaire about your goals and risk tolerance. Your options are reviewed by human investment consultants and specific recommendations are made every quarter.

5. QUESTION:
   401k Advice-if you’re under 59 1/2 can you take $$ out for emergencies like “losing your home?”?
   Would you still have to pay the 10% IRS penalty? Would they give me as much money as you need to pay off your home or do they give you a certain amount at a time?

   Thanks for answering……..

   • ANSWER:
     Many 401k plan will allow you to borrow against your 401k.

     This would be a far better option if your plan offers it.

6. QUESTION:
   401K advice Needed?
   Hello, I’m a 40 year old professional, with a wife and 2 year old son. The early years of my marriage, in particular the desire to keep my wife at home during the first years of our child’s lives, have led us to empty out a 401K from a previous employer. I’m essentially starting over again with my new 401K. I’m also having to think about saving for my children’s college education.

   My current asset allocation in my new 401K is: 20% in an S&P500 index fund, 20% in a small cap growth fund, 20% in a large cap growth fund, 20% in a bond fund, 15% in an asset allocation fund, and 5% in a money market account.

   Can you offer any tips/advice for getting my retirement savings where they need to be? Is my asset allocation strategy appropriate for my age? What % should I be contributing at this point in order to catch up? Thank you for any advice you can give.

   • ANSWER:
     You have an very specific situation that a financial advisor will have to work carefully with you in that your retirement and your son’s college education are so close together.

     As a point of reference as to your portfolio mix for retirement I just looked up the mix for Fidelity Freedom 2035 fund. This fund is designed to rebalance more conservative as the investors reach retirement age – targeted for people retiring in around the year 2035. It is unlikely this single fund is available in your 401K I used them simply as a professionally picked example of a portfolio mix. 66% U.S. equities, 16 % Non- US equities, 10% investment grade bonds, 7.5% High Yeild bonds, and .1% money market/other. (numbers rounded). Your portfolio listed above is actually really close to that already – super! Check to see if the Asset Allocation fund has some foreign exposure. If not, it may just be duplicating some of the other funds and could be changed over.

     Next part is make your retirement budget: Start by figuring between 60 – 80% of your pre-retirement income in order to live in retirement. This income will likely come from 1) Social Security 2) Pensions 3) investment income/ savings and 4) IRA/ 401K proceeds.

     You can request a statement from Social Security that will show your estimated benefit paid to you if you retire at age 65. That can go up if you work longer, and down if you file earlier – anyway, that plus if your wife is eligible for SSI, can be part of your income – if you are starting a new job now, the lieklyhood of a traditional pension is low, and in my opinion, any additional savings will go toward college for the little one.

     So you will need enough in your 401K / IRA vehicles to get you to 60-80% of your pre-retirement income -minus – your expectations from Social Security.

     Once you figure that out, figure that income figure is about 6 percent of the total that should be in that account on retirement day. Divide that by the amount of time you have left, (use a retirement calculator from online that can figure in the growth during your accumulation phase (there is one at Wachovia.com) and there lies the answer to your question above.

7. QUESTION:
   Need 401k advice…24yr old just starting out and naive to investments?
   I have been working for my company for almost two years and have been contributing to a 401k for almost a year now. I recently increased my contribution to 6% since my company matches half of that amount. I’m only 24 and completely clueless when it comes to investments so a coworker advised me to just put everything in the Fidelity 2050. I did that and I currently only have ,600 in there because I started off contributing less money and the company hasn’t matched it yet, that’s to come later.

   So what I want to know is any advice on what you think I should be doing with my 401k considering I’m 24 and that I know nothing about this so I likely cannot manage it consistently. I need to know a good balance to do that I can just leave be, unless there is anything I can do that doesn’t require much prior knowledge.

   After reading some of the things people already posted on this site, I changed my investments today. As I said earlier, I used to have 100% in the FID 2050 but now I changed it to the following:

   10% Company stock
   20% FID Contrafund
   70% FID 2050

   Did I do the right thing here? Should I do something different? Your advice is greatly appreciated. If you don’t mind, please include your experience and credibility with your responses. Thank you so much!
   Specifically, should I allocate less to company stock? I now feel like I should have only done 5% instead of 10%. How about the FID Diversified International?
   So what should I do? What % should I allocate to the 2050/company stock/contrafund?

   • ANSWER:
     I think you did fine and would be okay with it either way.

     I think now is a great time to be a little more aggressive with stocks so low so the latter change is good. The 2050 type funds are good for the long haul but the earlier criticism is that they tend to be a little too conservative. But this bear market has changed a lot of opinion on that viewpoint. Those funds are usually very diversified using indexes. I am not directly familiar with Fidelity’s.

     One thing to remember is that with pretax money in a retirement account there is no tax consequences for moving money around inside the fund. So you can make changes later if your investment ideas change without incurring taxes like you would if you sold or bought taxable funds to move money to an different after tax investment.

     Good Luck.

8. QUESTION:
   Need 401K advice. I don not know what to choose.?
   I finally decided to get into the 401k at work and start my retirement. The company offeres different types of investments, but when I ask the investment Adim, they say that cannot advise. I know nothing of what any of these descriptions mean. Where should I go for research as to where my 401k should be directed to?

   • ANSWER:
     The 3 top things are:
     1. Get started investing(time will make it easier to reach your retirement goals)
     2. Get the company match – this is free money, your admin can tell you what you need to contribute to get the full company match
     3. Start off simple – the simplest choice if available is a target date retirement fund, if that is not available choose either an index fund(such as the S&P 500) or an investment allocation fund(agressive, moderate, conservative).

     Good luck with your 401k. And make sure to not to take an early withdraw when you change jobs.

     When you feel comfortable with starting out, you can learn a lot for Motley Fool and the yahoo finance section

9. QUESTION:
   Need some 401k advice please! Answer if you really know about this please.?
   ok, I need some advice on my 401k plan. I’m 26 years old and have about 9800 dollars on my account. I contribute about 5% of my paycheck and my employer matches up to 4% of my contribution. I have an agressive investment plan and i’m losing everything that goes in to it. I’m thinking about contributing my money to my HSA account since it’s also pre tax money. Will my 9800 dollars still be invested and keep on going down or can I stop investing it somehow until things get better and I start contributing again? What would you do?

   • ANSWER:
     You are at an age where you have plenty of time to recover your money before you need it. I would leave the money where it is. Plus, keep on contributing, you would be buying the investments at a cheaper price now, so there is a better chance for larger gains in the long run, just invest in well established investments.

10. QUESTION:
    22 Years old. 401k advice (100% in stocks?)?
    Hi All,

    First an introduction:
    I started working a year ago. My company matches my contributions (100%) up to 6%. (I know, I should have started investing a year ago

    Research done: (minimal?)
    Various articles on kiplinger(sp?)
    Read a few forums on the matter.

    But I am not comfortable following the advice since most material doesn’t take into account that things have changed tremendously in the past year. Especially the threads/articles for young investors are dated late2007 /early2008

    Having said that, I wanted your opinions on what to invest in.
    Before I list the (minimal) options available via my 401k adminstrator, I wanted to get a feel for the general consensus for investment advise for 20 something year olds.

    From what I have read and heard, it is advised that since I am young, this is the time to take risk and invest 100% in equities. (80% domestic and 20% international)

    Other opinions I have heard is to invest 40% in bonds and 60% in equities.

    Please let know your thoughts.
    Sorry for the long winded post to a simple(?) question.

    • ANSWER:
      Bonds are not going to be worth much if inflation becomes an issue and all indications are that it will thanks to the spendthrift ways of our incompetent government. Your options might be predicated on how good your 401k investment options are. Some company’s options are not so good. At least some of them. It certainly is a fact that most investment advisers do recommend an 80-20 mix U S and foreign. I am not so certain that is such a great idea any more. The U S economy is not what it was 60 years ago but investment advice seems to be predicated on what was happening 60 years ago. Instead of putting 20% into bonds, I think perhaps it should at this stage be placed into a money market option even though they are not paying anything at the moment. At least it will be there for when bonds begin paying 16% interest as they did in the early 80s. If you were to put the 20% into bonds now, then when they do begin paying 16% interest that 20% will have nearly vanished. As for equities I am personally in favor of about a 40-30-30 split. 40% U S equities 30% foreign developed and 30% foreign developing–namely China and India and a little S. American but not much. For the 40% U S a decent portion should be smaller cap. The growth potential there is better. Maybe 10 to 15%.

11. QUESTION:
    Just started working and need some advice with my 401k?
    I’m 25 and I need some 401k advice cuz I’m so new at this.

    My company offer a 401k plan through Fidelity FID FRDM INDX 2045 K. The company is matching my contribution $ per $ up to 4% of my salary plus an additional 4% retirement fund. Is that a good benefit offer? And is Bond/Stable Value Inv Stable Value FIXED INCOME FUND the safest place for my money? My current setting is 80% in stock market (FID FRDM INDX 2045 K) and 20% in Bond/Stable Value Inv Stable Value FIXED INCOME FUND.

    Also how at my age, should I invest some in bonds?
    Blended Investments — FID FRDM INDX 2000 K
    Blended Investments — FID FRDM INDX 2005 K
    Blended Investments — FID FRDM INDX 2010 K
    Blended Investments — FID FRDM INDX 2015 K
    Blended Investments — FID FRDM INDX 2020 K
    Blended Investments — FID FRDM INDX 2025 K
    Blended Investments — FID FRDM INDX 2030 K
    Blended Investments — FID FRDM INDX 2035 K
    Blended Investments — FID FRDM INDX 2040 K
    Blended Investments — FID FRDM INDX 2045 K
    Blended Investments — FID FRDM INDX 2050 K
    Blended Investments — FID FRDM INDX INC K
    Bond/Stable Value Inv Stable Value FIXED INCOME FUND
    Bond/Stable Value Inv Income PIMCO TOTAL RETURN P
    Bond/Stable Value Inv Income VANG TOT BD MKT INV
    Short-Term Investments — VANG PRIME MM INST
    Stock Investments Large Cap FID GROWTH CO K
    Stock Investments Large Cap SPTN TOTAL MKT INDEX
    Stock Investments Large Cap VANG CAPITAL VAL INV
    Stock Investments Mid-Cap FID LOW PRICED STK K
    Stock Investments Small Cap ROYCE LOW PR STK IS
    Stock Investments International AF EUROPAC GROWTH R5
    Stock Investments International DODGE & COX INTL STK
    Stock Investments International SPARTAN INTL INDEX
    Stock Investments Specialty FID REAL ESTATE INVS

    • ANSWER:
      401k can be daunting at first. I’ve been working for awhile, and still don’t know what quite to do.

      Matching funds are always a good thing. Be sure you contribute at least enough to your 401k to get the maximum from this. In your case, this means you want to contribute at least 4% from each paycheck.

      There are basically two types of funds offered in a 401k – mutual funds and bonds. Mutual funds are a collection of stocks based on some sort of theme. It could be “Europe” or “small companies” or even something as arbitrary as “Companies starting with the letter ‘D’” – read the prospectus and other documentation to try and evaluate if a fund sounds like a good investment. Because mutual funds are tied directly to the stock market they are riskier than bonds, but generally have better returns. Bonds are like loans made to the government (state or federal) that are then repaid over several years. They are a lot less risky than stocks/mutual funds, but also have a lot lower rate of return.

      Many experts say that your mix of mutual funds (stocks) to bonds should change as you get older.

      When you’re young and just starting out, an 80-20 mix is considered good. As you get older, you’ll want to shift from stocks to bonds, to better protect your nest egg. By the time you’re ready for retirement, your mix should be closer to 10-90.

      If you really don’t know which funds to invest in, there’s always the index fund, which is based on the S&P 500. Then there are “package deals” (the FID DRDM INDX xxxx” funds) which are based on your estimated year of retirement. So if you were looking to retire in 2040, choose the 2040 fund. If you leave your money in this fund, over time you’ll see its prospectus shift from mostly stocks to mostly bonds.

      Finally, remember that you are not guaranteed to make money. If the stock market takes a hit, or a specific company has problems, you may lose money in one or more of your investments. The mutual funds try to protect investors against this by having multiple stocks in their portfolio, but it’s still a good idea to check in on your investments every 3 or 6 months. If a fund isn’t doing well, it may be time to move your money into a different one. However don’t obsess over it. The market is going to “wobble” from day to day, so don’t panic if you see it go up one day, and go back down the next. You’re more interested in the longer term trend, and so long as that’s going upwards, you should do OK.

12. QUESTION:
    401K advice for UK citizen on L1 Visa in US?
    Does it make sense for me to invest in a 401K in the US, given that I will probably move back to the UK in 3 to 5 years and, as I understand it, will not be able to transfer it to a UK equivalent without tax and penalties etc? My company already pays into a 401K but I’m not contributing at the moment.

    Or would it make sense to keep not contributing and just stick it in a mutual fund?

    I also have a UK pension with my employer (same employer) which is currently frozen and I assume I would continue on my return.

    • ANSWER:
      By all means, contribute to a 401K, especially if your company gives a match. Even if you move back to the UK, you can still leave your money in the 401K in the US.

13. QUESTION:
    I need financial advice concerning my contributions in my 401k?
    I have a 401k program with my company & they match 60 cents on every dollar. However, I’m not sure I want to continue my savings plan at this time since all funds available are averaging -3 to -38%. I feel like I can do better investing outside despite my companies contributions in the funds that I can allocate my money. What do you think???

    • ANSWER:
      Because of the 60 cent match the company gives you, you have an instant 60% return on your investment. That’s not something you can match anywhere else. You can technically support a 60% loss and still break even. Long term investing always pays off. Select a course your comfortable with, a decent combination of stock funds and bond funds. As you get closer to retirement make periodic changes to less stock and more bonds to protect your nest egg. You don’t want to be 55 and have a lot in stocks during a crash, but at 40, you should be able to recover such a loss. Plus the stock market “correction” only means you get more bang for your buck. You buy up more shares cheaper.

14. QUESTION:
    I’m doing my 401k and I was interested in what I should invest my money in? Any advice?
    I’m 21 now I figured I haven’t done my 401k and it’s time. I do want to invest my money and be smart about what I’m going to decide to do.

    • ANSWER:
      Hello,

      Allot of people have the same problem as you are experiencing, a good amount of money but don’t know where to place it.

      I have to confess I was also one of those people.
      Until I actively started searching for a good investment opportunity.

      And I’m glad to tell you I finally found one that is working out great for me.
      It’s a mannaged account run by a verry capable man.
      if you want you can check out the results he has made.

      Here you can check them out:

      http://my-robottrader.blogspot.com/

      My money is working for me, in three months time I already have a ROI of 101%.

      If you want a good place for your money to grow then I can only advice you to take contact with my moneymanager.
      just send me a mail to derrekmay @ gmail.com, and then I’ll bring you in direct contact with him.

      I hope this answer has helped you out.

15. QUESTION:
    What is a good book to help me learn about stocks? I’m rolling over my 401K into an IRA and would like advice.?
    I’m close to graduating college and have been putting funds into my 401K until I was laid off. I’ve lost close to half of the invested funds and am now wanting to try the stock market. I have little to invest now but plan on contributing more as soon as I can. I just want to learn and know more before I roll over my 401K into an IRA account.

    • ANSWER:
      Here is some reading material that can get you started in the right direction,
      The first book you should read is Rich Dad Poor Dad by Robert Kiyosaki
      Then try some of these
      What Works on Wall Street by James O’Shaunessey
      Beating the Street by Peter Lynch
      One Up on Wall Street by Peter Lynch
      The Warren Buffett Way by Robert Hagstrom
      Trading For a Living by Alexander Elder
      Mastering the Trade” by John Caster
      How to Make Money in Stocks” by William O’Neil
      24 Essential Lessons for Investment Success by William O’Neil
      The Disciplined Trader by Mark Douglas

      Get into the habit of making daily visits to some websites like MSN Money and Yahoo Finance. (http://moneycentral.msn.com/home.asp http://finance.yahoo.com/ )

      While at MSN following the strategy lab analysts to get a feel for what the pros are doing and why. This site has some basic information for beginners. If any site offers free information, take it.

      Other website that can provide instructions and help with procedures and terminology are
      Investopedia – http://www.investopedia.com/ Stock Charts – http://stockcharts.com/
      http://www.investorshub.com/ http://www.1source4stocks.com/

      Visit some of the more professional websites like Zacks – http://www.zacks.com/
      Smart Money – http://www.smartmoney.com/ Schaeffer’s – http://www.schaeffersresearch.com/
      Some of these web sites will have advertisers who are worth looking into also. And remember, if they offer free information, get it.

      Attend all the free seminars you can, just be careful and don’t get pressured into anything you really don’t want or need. Most schools offer courses in finance and economics, but very few will have courses on the mechanics of the investment markets, if they do try taking the course. You may want to consider on-line courses, the New York Institute of Finance use to have such courses. Try to get some fee information from the stocks exchanges they all have (had) free booklets, SIAC and some of the regulators (FINRA SEC MSRB CBOE) may provide some free literature.

16. QUESTION:
    my 401k advice what to do?
    my 401 k is dropping like a rock. should i cash it out
    use money for an i.r.a or bonds or gold need good advice
    im 64 years old

    • ANSWER:
      You are 64? and havent moved most of your investments into save money market funds?

      Right now at least 80% of your holdings should be in ultraconservative money market accounts and only 20% should be in stock and bonds.

      I can’t tell you what to do. It is so late to fix your 401K and save at least enough of it to have a decent retirement.
      The problem is this. If you liquidate your stocks and bond portfolio then you will only get the current market value of these shares and the shares will be sold and are gone.

      If you keep the stock and bonds then at least you have a chance that the market will bounce back and since you still have the same amount of shares your retirement portfolio has a better chance to recover.

      The last decent opportunity to get “out” of the stock market was around August. Right now the sky is falling and no matter what you do any changes made to your 401K are more likely to hurt you.

17. QUESTION:
    401k need advice for safe keeping of money.(read on)?
    Investment minds please help.
    I have some money which took a beating(as most of us did).
    Now I want to move out of the 401k,and park the money in a safe garage until the crazy up and down market stabilizes.
    What advice could you give me .I prefer not to lock up the money in a 12 cd,because I may need access to it.So if you have had a similar situation,or have any advice I would appreciate it.Thanks.

    • ANSWER:
      You realize if you are not 59 1/2 you will pay penalties, etc. if you take some money? That being said, if your employer allows it, I’d transfer it to a bank money market IRA. Perhaps one of your 401K options is a money market. If that’s true, just park it there.

18. QUESTION:
    what advice do I need for a good return on my 401K?
    I am retiring in 4 years. What advice do I need to be safe

    • ANSWER:
      ditto what Steve said. With only 4 years to go, I’d put the VAST majority of that 401k into fixed income, money market, or short term bonds (whatever your plan offers).

      Also, with 4 years to go, it’s probably time to consult with a financial adviser so that you understand how to withdraw from your 401k and IRAs the most tax advantageous way possible. They can help you plan how much you need to keep in the stock market, how to set up bond and CD ladders, and how to calculate what kind of returns you need for the next few years for your retirement.

19. QUESTION:
    What is your best advice to saving for retirement (besides 401K)?

    • ANSWER:
      It depends upon your current age, if you’re in 30′s better invest 70% of your savings in Stocks, Mutual Funds and the rest 30% in bank deposits, if you’re 40′s invest 60% in Stocks and 40% in bank deposits and if you’re in 50′s+ invest 30% in stocks and 70% in bank deposits .. that will be very much safe for your retirement life..

20. QUESTION:
    401K – Advice needed?
    I recently lost my job. I have a very sick family member & I am the only one she can rely on – she may not make it to the end of the year – thus this being the reason I have not jumped back into the job market , She want to spend as much time with me
    as possible & me working full-time would not be able to do
    that. I am currently getting unemployment Insurance.

    I have a 401K with my former employer since 2001 & is 100% vested.

    I did take out a cash withdrawal from my 401K to help her & to pay off my outstanding bills. I have NOT paid back the full amout of the loan.

    I have about K in my 401K.

    I may have to dip into my 401K again to help her later as what we have will not cover the “expected” expences.

    My questions are:
    When I dip into my 401K again:
    1 What IRA(s) am I eligible to put the remainding funds in?
    2. I am also thinking of doing a full withdrawal (+penalty) & invest the remainder after all expences have been paid.
    3. What other options do I have?

    We live in NYC

    • ANSWER:
      To answer your questions:
      1) You can invest (or “roll-over”) your 401(k) proceeds in any IRA account, either regular or Roth – although there may be tax issues in going from a tax-deferred vehicle (401(k)) to a non-tax deferred (Roth IRA)
      2) Why do a full withdrawal and pay the penalty when you can simply roll over the 401(k) to an IRA directly and not pay the penalty?
      3) You may be able to leave it in your last company’s plan, unless they make you roll it over or cash you out.

21. QUESTION:
    401k advice…please help?
    Ok, I’m 37 years old. For the past 10 years I’ve put all my funds in the equities (higher risk portfolio). At what age should I diversify between that account, the balanced and fixed? And, at what percentages should I divide them if so. Also, my 401k has target-date portfolios based on when you retire and it diversifies the funds for you. I would be in the 2035 fund if I chose to do this; however, the NAV for that is 19.XX and my equities acct is at 11.XX so it seems I’m buying lower during a crappy economy. Should I just ride this out another couple years and THEN spread it out a little? Or should I open up that 2035 portfolio and start doing that? I’m so confused, I’m not even sure if I’m asking the right things.

    • ANSWER:
      At 37, you are still a long term investor, so staying predominantly in equities is a good idea. If you want to put it in the 2035 fund, that would probably be fine. If you want to do it yourself, you might consider a small investment in the more conservative funds right now.
      As you get closer to retirement, decrease the funds you have in high risk funds and increase the funds in more stable categories. That is what the 2035 fund managers are going to do for you.

      Grandpa

22. QUESTION:
    Young 401k Advice?
    I am 21, I’m starting a new job that is offering me a 401k w/ OppenheimerFunds. I’m about 5k in credit card debt that isn’t a problem, but the sooner I pay it off, the better. I will be making about 300-400 per week (take home). My company will match the first 3% at -, 4-5% -$.50, 6-7% -$.25. How much should I put in? I’d like to max it out, but I have bills, but I still live at home. What should I do? I plan on staying at this company for a while, if it goes over as well I hope, I’d like to make a career out of it. I’m all about living a comfortable retirement.

    • ANSWER:
      Good for you! Start saving 7% immediately. You’ll get used to it quickly and won’t miss the money. As you get raises, raise the percentage that you’re saving.

      Since you’re still living at home, your monthly expenses should be low enough that you’ll still be able to put extra toward your credit card debt. Once your debt is paid off, save the money you were putting toward your debt in an emergency fund. Once you have an emergency fund, start saving for a house.

23. QUESTION:
    401k investing? Advice from non-paid, bias expert. Not linked with a firm and wants % of my portfolio?
    I have a 401k and investing thru ML. Anyplace I can invest and do away with the fees and costs of having at a large company who is out to make money themselves? I am 42, and want to get the most for my 401k.

    • ANSWER:
      If you’re investing at ML then you have large fees if you’re in ML Funds. Avoid those….the performance doesn’t outweigh the expense ratios. Depending on your age, it probably makes sense to find the index funds and go with those. Those typically have the lowest expense ratios.

      Don’t kid yourself…all of the companies are in it to make money for themselves. ML just happens to have huge overhead and high profit expectations.

24. QUESTION:
    401k advice for young people?

    • ANSWER:
      Not sure of the question

      Should you do it or wait. DO IT.

      I would put into the account AT LEAST what the employer will match.

      It’s also important that you have a regular savings account/investment account.

25. QUESTION:
    Advice needed– 401k or Roth IRA for temp job?
    Hi, I’m hoping to get some advice on how to approach my work 401k plan… I also plan on opening a Roth IRA.

    I am a recent college grad that is starting my first job next week. I am going to work for about 10 months before I start graduate school next year Fall.

    This is my company’s 401k info:
    =======================================================
    All employees are automatically enrolled in the company’s 401(k) Plan:
    • You are eligible for automatic enrollment (2% of your base pay) on your first day of employment. Your first deduction will begin on the first pay period following 30 days of employment.
    • After your first six months, we offer a 100% employer match on employee contributions for the first 3% of eligible compensation, and a 50% match on the next 2% of eligible compensation.
    • You may contribute up to 99% of your gross eligible earnings up to the IRS limit.*
    • We offer 100% immediate vesting – so you don’t have to wait any time period for the money to be yours.
    =======================================================

    QUESTIONS:

    1. I’ve read somewhere that if I’m only going to stay a short time at a company, I should not bother with the 401k and just focus on my Roth IRA. BUT since my company offers 100% immediate vesting, it would be a good idea to contribute to this 401k up until my employer’s match (free money), right?

    2. Since the employer match doesn’t kick in until AFTER my first 6 months, do you think I should not contribute to my 401k until after 6 months (when the employer match finally kicks in)? Is this allowed?

    3. How does this sound?
    FIRST 6 MONTHS: Contribute only to my Roth IRA and not contribute to my 401k (since no employer match)
    AFTER 6 MONTHS: Since employer match finally kicks in, contribute to 401k up until max employer match. Then contribute rest of money to Roth IRA.

    • ANSWER:
      Step 1: Contribute 5% of your salary to the 401k so you are in and get the full match.

      Step 2: Open an IRA and max out the annual contribution

      Step 3: Contribute more than 5% to the 401(k) as your budget allows.

26. QUESTION:
    401k advice 2009 plan?

    • ANSWER:

27. QUESTION:
    has anyone ever gotten screwed with their 401k?advice on starting one?

    • ANSWER:
      A 401K is a great way to save for retirement. Investment wise you can look at the various funds that are afforded and look at the previous performance by month or year and what the market is like. Try to put money in areas that make sense to you. What are areas or places where growth is likely. A percentage in your company stock is usually wise too, but how much depends on yourself.

28. QUESTION:
    401K withdrawl advice?
    I work for a company that has terminated the 401K plan after only a few years. This account only has <00. I am thinking of cashing it in since its not much money and I could apply towards credit card balance and school loans. I realize that I will get the fees plus additional 10% penalty at tax time, but should have several write offs this year to compensate. What is the opinion of some financial people? I know I should roll over to something else, but the money could really help us now..? Suggestions?

    • ANSWER:
      Find another way to pay off your debt. A 401 (k) is meant for retirement, not to pay off old debt. Not only would you be hit with a 10% penalty, you will also have to pay federal and state income tax.

      I would roll this money over into a rollover IRA, then you have the option of a traditional or Roth IRA (preferable). Let your 401 (k) administrator roll this money over into whatever brokerage rollover IRA you choose because if they cut you a check, you will have 60 days to do it yourself.

      http://individual.troweprice.com/public/Retail/Retirement/IRA/Traditional-vs.-Roth

29. QUESTION:
    Advice for 401k- reduce or stop?
    I’ve officially started paying someone to keep my money. My 401k has lost more than my employer has contributed (year to date).

    I used to put in 10% per paycheck, employer matches 4% max. I dropped this down to 5% when the economy started turning so I could pay off some bills faster. Now that I’m losing my money, should I consider committing all of this capital to paying down debt?

    I only owe a couple thousand dollars, none of which is past-due or in bad standing. I realize that I would also be losing employer contributions (free money).

    Does anyone have advice? What have you done? I will award the 10 points to the best answer that lists their credentials and offers a well-thought suggestion or plan.

    Thanks!
    Ah yes- sorry, I am 28 and do not plan on retiring until 70+ health-and-God willing.
    The debt I have is healthy and contributing to a good health score. Like I said, it is not over due, and is a very small in comparison to my annual income.

    Also, I won’t WANT to retire before 70!

    • ANSWER:
      look with the market down it is at garage sale prices. you have very little debt. put the max in and get your match you are buying more shares now that will come back. Now only do this if you are young enough to stand the time for the markets to rebound. Don’t be stupid the market has made money every 5 year period and will this 5 years

30. QUESTION:
    My 401k is losing money. Should I completely stop contributions until the market picks up?
    401k advice

    • ANSWER:
      Unless you need the money now, I’d continue to make contributions, and here’s why:

      (1) Your employer match is based on a per-pay period rate. If you don’t invest that pay period, you miss the match for that week forever, and that can be a fantastic return on investment.
      (2) When you buy shares now you’re buying them cheaper than when the market is higher. I know that’s a no-brainer, but the implication is that a fixed amount of money (your bimonthly deduction) buys more shares when the market is low than when it is high. More shares means more individual streams of dividends and greater price appreciation.
      (3) If you wait until the price begins to go up, you miss out on buying when the share price is really low.

31. QUESTION:
    Need advice in allocating my T Rowe Price 401k?
    I am looking for advice in allocating % rates to my company’s T Rowe Price 401k. I am 30 years old. Below are the funds available…

    Stocks
    RPBAX – Balanced Fund
    PREIX – Equity Index 500 Fund
    PRITX – International Stock Fund
    RPMGX – Midcap Growth Fund
    PRNHX – New Horizon Fund

    Bonds
    RPSIX – Spectrum Income Fund

    Money Market/Stable Value
    PRRXX – Prime Reserve Fund

    • ANSWER:

32. QUESTION:
    401k early withdraw advice needed?
    I need advice on early withdraw of my 401k, i need money badly to take-care of some business and the only option that I have is my early 401k withdraw. I just change my job and my new job don’t have 401k plan, they only have Virginia Retirement Plan, but i had a plan with my previous job and since I am not working there anymore my money was just sitting there, so i called them today about early withdraw and I was told that if I withdraw it now I am going to pay 20% for federal and 10 penalty. Is there anyway i can withdraw without paying all this. If I rolled it to IRA will I be able to withdraw it immediately without pay the 20% for the federal and 10 penalty. please advice me.

    Thanks

    • ANSWER:
      Some 401(k)s will allow loans even after termination of employment (but most do not). If this is the case, this is your best option, as you will be able to access the funds without penalty. You just have to pay it back prior to liquidating the account or it will be considered a distribution.

      If you can’t borrow from the account and you MUST access the money, try to raise as much of the cash back and open an IRA within 60 days of the withdrawal. You will recoup any penalties and taxes on that amount upon filing your return.

33. QUESTION:
    401k Question, Need advice and answers.?
    29 year old male with a emergency situation. My car, which I’ve been paying anywhere from 400-800 a month on repairs through most of 2009, is dying. Transmission is starting to fail. 95 Caddy Deville 109,500. Problem is I have 1 job, my saved money gone from numerous expensive repairs. Another problem I work at 3am 30 miles away, no transportation, no way I can get a ride to work, since no one there lives by me. I thought that I’m in an emergency situation, maybe I would tap into one of my two retirement accounts. One is etrade roth ira, I wont touch, other is my work 401k, that I’ll take about 9,000 out. This is my last resort, I’ll try to get a bank loan for a 2003 accord with 54 thousand miles, maybe a loan from a family member, I don’t know, I’m in a real bind, your thoughts and advice, and explain the penalties with withdrawing from 401k.
    I do not want to shop for a car like the user said, as I paid 400-800 a month in 2009 on car repairs. I have to shop for a car now, cause my transmission is failing, and theres numerous other issues that the reputable mechanic sees, the mechanic recommended to just cut ties with the car.

    • ANSWER:

34. QUESTION:
    Need to rebalance 401k. Looking for advice on funds to choose?
    Below are the options in my 401k. I am 31 years old. Don’t mind being a little risky and I currently have ,000 in my 401k (down 32.5% this year Any advice on which funds I should pick and what percentages I should use would be awesome!!

    Stock Investments

    Large Cap
    AF GRTH FUND AMER R4
    DAVIS NY VENTURE A
    * FID CONTRAFUND
    * FID EQUITY INCOME
    * SPARTAN US EQ INDEX

    Mid-Cap
    ARIEL APPRECIATION
    COLUMBIA ACORN Z
    GS MIDCAP VALUE INST
    WFA C&B MDCP VAL INV

    Small Cap
    ABF SM CAP VAL INST
    ALLNZ NFJ SMCPVAL AD
    FBR FOCUS INV
    FID SMALL CAP STOCK

    International
    AF EUROPAC GRTH R4
    FID DIVERSIFIED INTL
    SPARTAN INTL INDEX

    Blended Fund Investments*
    International
    BLKRK GLOBAL ALLOC I
    FID BALANCED
    FID FREEDOM 2000
    FID FREEDOM 2005
    FID FREEDOM 2010
    FID FREEDOM 2015
    FID FREEDOM 2020
    FID FREEDOM 2025
    FID FREEDOM 2030
    FID FREEDOM 2035
    FID FREEDOM 2040
    FID FREEDOM 2045
    FID FREEDOM 2050
    FID FREEDOM INCOME
    VAN KAMPEN EQ INC A

    Bond Investments

    Stable Value
    FID MGD INC PORT

    Income
    FIDELITY US BD INDEX
    PIM TOTAL RT INST

    Other Investments
    BROKERAGELINK

    • ANSWER:
      It would be easier to answer your question if you supply the symbols for each, the expense per fund and the dividend yeild. Also you seem way too comfortable with your 401k being down 32.5%. Even though you are only 31 it could take a few years to recoup your losses.

      Trust me if you invest the time and energy to learn everything about financial investments, like so many should, you can prevent losing money foolishly by just learning the basics. Then by learning more and more it just gets easier to make money, even when the market goes down. For example here are the investments I traded in and out of in our 401k this year. FFFFX (-21.21), FSEMX (-16.43), FSIIX (-27.63), FUSEX(-19.32), FTHRX (-9.7), FRTXX (2.3), and LUX (-34.2) are the symbols with the year to date returns without dividends except for FRTXX, for each as of 11-05-08. Plus each have been lower except FRTXX, which is a money market fund and value is always .00. So what would you think our year to date return as of 11-05-08 equals. Just to reinforce some hope in that you can do the same my return is 19.3% ytd. I mainly stayed in FRTXX and timed my entry/exits in the other investments when I thought they would go up then down.

      As you may have noticed I have many of the same choices in our 401k. I knew in February 2007 the market was near a top and would soon drop, so I mainly stayed in FRTXX. Email me the symbols, expenses, and yeilds and I will look at my charts for the ones you have that I don’t. And then afterwards I can give you an answer based on risk vs reward. My email is rbw1226@yahoo.com

      Here are some websites to help you become a more informed and active investor and not a passive one. First and foremost you should know the risk vs reward whenever you invest. You should also protect your gains by keeping a much closer watch on the markets and how they could affect your 401k.

      The first has a contest starting 11-17-08 trading stocks and currencies.

      Best wishes,
      Burt

35. QUESTION:
    Financil advice?? 401K to pay debts?
    Hi,
    I am not even sure how much debt I’m in… If I had to guess is say just about 3000 dollars (I’m not including medical bills)… And I have about 3,000 in my 401K… I am 21 years old. I am wondering if it would be wise to go ahead and pay off my debts with my 401K? I have horrible credit due to trying to be on my own well before I should have… Every thing I have ever had credit in I have messed up… Is this a good idea? Will my credit score be automatically fixed? Do I need a finacial advisor? I know I will be wanting to purchase a home with in the next five years… Will my credit be up to par? Ugh!!! So much…
    Thanks,
    B

    • ANSWER:
      It’s ,000; that’s not a big hole to dig out of, but you need to turn it around now. Don’t touch your 401(k); the taxes and penalties will leave you far short of the amount you need to pay off the debt. Plus, the continued tax deferral and leg up on your retirement make those funds more valuable to you right where they are.

      Make a budget; figure out where the money is going, make yourself accountable to a spending plan, and make sure that budget includes a substantial monthly amount put toward paying down the debt. Your credit score will not be improved in the short run by this, but that score is a reflection of how you handle paying your debts. It will improve in due time.

36. QUESTION:
    i am looking for advice on changing my 401k?
    while my company stock is high (ticker: peg) i want to change to another fund. i am breaking the rule of all my eggs in one basket(100%) in stock. it was a good gamble that payed off. but i dont think it will hold at the price it is trading at. a few examples of what i can switch to are: small, mid, and large cap equity; conservative, moderate, and aggressive portfolio,; along with bond and international funds. i am 44 years old. ty

    • ANSWER:
      Carol,
      First does you company have a pension plan, where when you retire you will get a fixed payment every month (given you meet specific rules) or a lump sum payment. I would venture to guess given your age and if you have worked there very long it does. The reason I ask is that if it does, it will be heavily invested in Bonds, so do not buy any bond fund. Bonds are important but you have plenty.

      Given your age, I would recommed about a 30, 30, 30, 10 mix. I would put 30% large cap, 30% in mid cap and 30% in small cap and 10% in International. If you wanted you could make it 25% in all.

      Conservative and Moderate portfolios generally puts too much in bonds for any one only 44 years of age. I like making the choices so I don’t like the terms Conservative, Moderate and Aggressive. Generally Aggressive still put too much in Large Cap stock. Small caps have more volatility, but in the long term (and 15 to 20 years is long term), small and mid caps have historically done better.

      Now as you move closer to 55 to 60 move the percentage to more large caps and mid cap, but never move below 10% International and 10% small cap. And don’t worry about any bonds until you retire, as long as you have the pension waiting for you.

      International is good because more than 50% of the companies are located outside the US. Good companies like Shell, Phillips Electronic, Toyota, SAP and on and on.

      I should have said, you could keep 5 to 10% in PEG, so do a 20, 20, 20, 15, 5. PEG pays 3% dividends and has had good appreciation over the last 2 years. Its P/E is getting a little high for a utility, but not out of proportion. Because of changes in tax laws a few years ago, dividnend paying companies have been in favor in the market. Anytime there is uncertainity in the market, they hold pretty well.

37. QUESTION:
    i am 62 getting ready to retire i have 200,000 in my 401k need advice what to do?
    should i invest in aIRA and draw % a mounth

    • ANSWER:
      I hope you have a pension with cost-of-living increases, because otherwise, you are not going to make it unless you live in a trailer and don’t buy clothes.

      Roll your 401k into an IRA so you can make your own investment choices. We live by the 3 Bucket Rule: have 7 years’ income needs in cash (money markets, CDs, savings); 7 years’ income needs in bonds; and the rest in the stock market, a growth-and-income fund or plain vanilla growth fund. don’t try to be tricky, don’t invest in anything you don’t understand. This allocation allowed us to retire in Jan. 2009 when the whole rest of the world lost 40% of their wealth. We didn’t care, because of the 7 years of cash. We can afford to wait out the stock market (now just about back where it was).

      Your cost of living will probably NOT decrease after retirement. Our COBRA insurance cost us ,043/month last year, now it’s ,300/month. That’s the price of a new (small) car every year, just for health insurance. It takes 35% of our income just to buy health insurance, and that’s GROUP insurance, not individual. IF (big if at 62) you don’t have ANY health problems, you may be able to get a cheaper individual policy, but not if you have high cholesterol or HBP or anything else wrong with you. This is the big dilemma of Baby Boomers: how to get health insurance until they are old enough for Medicare.

      Statistically, you can withdraw 4-5%/year from your 0,000 and not outlive your money. Can you live on 00/year in addition to pension and SS? But if you spend 10% of that 0,000 in the first 3 years, statistically you WILL outlive your money. Your choice.

      Roll it, keep a lot of cash on hand, don’t be a big spender, then good luck!

38. QUESTION:
    I am 18 and need financial advice, 401k, savings?
    I started a job where they will give me a 401k. And match me on that. I don’t know what to do though?

    My primary concern right now is not retirement, it is money to buy assets. I want to own things that make money for me. So i want money to be able to fund that.

    I am thinking of saving maybe 25k for when i am 23 or so. So i can buy a small business that is already running. Or down payment for a rental property.

    What should i do? invest in 401k and have it matched then take 25k when i am 24 or put 300 a month into a savings account and have 20K in around 5 years….

    what to do?

    • ANSWER:
      Very good questions.You are a very wise person to start doing this at your age, getting this jump start will let your money start to compound quicker, this means more money growth. It is best if you diversify your investments.
      Go with your company’s 401k and at least contribute the matching % they do. The 401k is nice beacause you may take a loan for your business you want (don’t be a landlord)from it and pay it back to yourself. The 401k grows faster and larger than a savings account.
      Talk with a financial advisor about setting up an IRA wether it’s a regular IRA or the Roth IRA. I would go with the Roth.
      The Roth money is all tax free when you retire at the right age, the 401k and IRA will be taxable. The IRA and Roth IRA
      place your money in lots of different growth areas,by doing this you are not putting all you eggs in one cart.
      I’m pretty sure another option w/ the 401 is that you can roll over some $ each year into these IRA accounts without paying tax to do so. This over time, will grow larger than leaving it all in the 401 beacause you are diversifying.
      It’s recommended that you keep 6 months of your salary in a savings account for emergencies, that is about all I find them useful for.

39. QUESTION:
    need advice on 401k plan?
    I’m starting a 401k plan through my job but I know nothing about such things. I’ve got 45 years ahead of me before I retire so I can take some risks. How do I know where to put my money?

    • ANSWER:
      Sounds like you are young. My advice is to contribute the maximum amount allowed by your employer. Put them money in a good mixture of growth and agressive growth funds. Don’t put all of your money in the same options. As you approach retirement you will want to move money into less agressive investments like bond funds.

40. QUESTION:
    Whats the difference between a 401k and pension plan? Can someone give me advice on how to invest?

    • ANSWER:
      A pension plan is funded by your company. Pension plans are becoming less and less common. Basically, your company will pay you a certain amount of $ per month when you retire based on your age at retirement, your number of years with the company, and your average salary while you worked there.

      A 401(k) is funded by you. Sometimes the company will “match” your contributions somewhat — a typically “match” is 50 cents on the dollar up to the first 6% of your contributions. You specify a certain % of your salary to go to your 401(k) — I think the maximum is ,000 or ,000 per year. The money is yours right away, but you must leave it in the 401(k) plan till you are at least 59-1/2 yrs old, otherwise you will be penalized for taking an “early withdrawal”.

      Hope this helps. This is just the BARE BONES BASICS — there’s tons more to learn, but no point in overwhelming you if this is all new to you right now!

      If your company offers a 401(k), they probably also have some materials that will explain the ins and outs of the 401(k) plan. You should read that, and also talk to someone in your HR or benefits dept (whichever is the one that administers the 401(k)) — they should be able to give you some good basic information as well.

      Good luck!

41. QUESTION:
    Advice on Fidelity 401k investments?
    Advice on Fidelity 401k investments?

    I’m 22 y/o and have only ~0 in my new Fidelity 401k (which I’m not familiar with it at all).I am going to start putting 6% from my paycheck. I will be talking to my manager on Monday. Is there any specific questions that I should ask? Any advice is appreciated.

    FYI, this is my current approx investment %:
    68.71% FID FREEDOM 2040
    31.29% FID FREEDOM 2050

    • ANSWER:
      You are currently invested in “life cycle” funds. These are actually a good choice for people who do not understand investing enough to feel comfortable with setting up a balanced portfolio by themselves. Most people pick one target level, such as 2040, but having money in more than one doesn’t hurt either.

42. QUESTION:
    Advice on Fidelity 401k investments?
    Hello,

    I’m 30 y/o and have only ~,000 in my new Fidelity 401k (which I’m not familiar with it at all). Any advice is appreciated. Thanks in advance.

    FYI, this is my current approx investment %:
    30% FID CONTRAFUND (FCNTX)
    20% FID DISCIPLINED EQTY (FDEQX)
    10% FID CANADA (FICDX)
    20% FID DIVERSIFIED INTL (FDIVX)
    10% FID INTL DISCOVERY (FIGRX)
    10% FID SOUTHEAST ASIA (FSEAX)
    I’m contributing as much as my employer matches. So 0+300=0/month

    • ANSWER:
      It looks like a great portfolio for a 30 year old and current market situations….
      Definitely lucky to get into Contrafund and Diversified Int…
      even you make moves in thge future, always leave something in them…
      Southeast Asia was a ” screamer” but has really fallen on bad times…you might have enough Asia/China exposure in FDIVX and FIGRX… I might switch that FSEAX to either more Canada ( mostly ” energy” …don’t see anything in the future to weaken THAT!)….or go with FLATX if they offer it…it’s a real growth story for a few years to come…loaded with the natural resources and oil that other markets are buying and the population is sharing in that wealth and becoming fantastic consumer/spenders !!
      Good luck…keep your eye on things…but you should be good with the ” foreign exposure” for at least 3 to 5 more years…( and you may have more than a ” double” by then..nice start to the ” nest-egg”)
      P.S. No way of knowing what funds your Fido plan offers… but don’t be afraid to venture small percentages in ” sector funds” if they offer their complete line… Real Estate will turn around in a while and when it does FRESX is a good one…or you could go ” energy” with FSENX,FSESX or FNARX……All have treated my family’s IRAs well.

43. QUESTION:
    401K question advice please?
    Im 30
    have about 18000 in my 401K
    I put in 9% of my pay every 2 weeks
    Company matches 3% (50 cents on the dollar) and puts retirement $ in
    So far this year I have put in 1300, company matched ~600 and retirement ~600
    But out of th 00 that has gone in I have lost over 2000

    Do I stick with it and hope it gets better?
    Do I pull out completley?
    Do I lower the percentage im putting in?

    Thanks for your help!

    • ANSWER:
      You need to do some “restructuring”.

      Don’t sell the funds you already own… at least they are accumulating a lot of cheap (unfortunately worthless) stock shares right now.

      Pull out your last fund statement and look for a fund (or funds) that still makes money. (Probably one you aren’t invested in…).

      Add these fund(s) to your portfolio.

      Rearrange your distribution. Allow 2% to go to each of your old existing funds and the rest goes into this new fund(s).

      This way you are keeping the old funds and there is still a chance that when and if the market turns these shares will recover in Dollar value.
      (But they are no longer being fed…)
      You are directing most of your new incoming money towards a fund that is making it thru this mess in one piece.

      Most likely only the money market funds are still showing a moderate gain… it does not matter. If it made money in this climate it should become your new best friend until the market recovers.

      Then you can re-arrange your distribution percentage again and should come out with most of your money intact.

      I would rather see a modest 2% gain right now instead of a 50% drop.

44. QUESTION:
    I’m thinking of rolling over my 401k funds to T-bills until the market stabilizes again. Any advice?

    • ANSWER:
      DO NOT u will lose in long run.
      market is in adjustment BUT is still up over 5yr ago.

45. QUESTION:
    My 401k is tanking, what do I do? Where can I get advice on turning it around?

    • ANSWER:
      Have a long term horizon and fear not.

46. QUESTION:
    Need Advice of 401K Funds Re-allocation?
    Can somebody advise me at this moment whether I have to change my 401K to some Treasury Bond Fund or Money Market Fund for safty until the market is clear, since my balance already down 10% more and I’ll retire in 2011. Now most funds I had was stock funds and the financial market seems to need quite a while to recover. TKS.

    • ANSWER:
      If you reallocate into a bond or money market fund, you will preserve your principal, but you will also ensure your prior losses. If you are retiring in 2011, that may not be enough time for the market to recover from its current doldrums (looks like things will get worse before they get better).

47. QUESTION:
    Need legal advice in regards to 401k contributions?
    I was laid off from my job a couple of weeks ago and upon checking into my investments, I discovered that my boss has not been making the employees contributions to our 401k plan for quite a few months however the money has been coming from our paycheck weekly. He also told us that the company does not match our contributions because he gives big bonuses at the end of the year, but come to find out from the broker that the company’s plan IS to match our contributions. I confronted my boss via e-mail who assured me 2 weeks ago that he would make the contributions but as of today 9/11 he has not made any contributions.and my account has not had a contribution since April of this year. Is this illegal and what steps can I take to sue him and do I have a lawsuit against him? Is it worth it to sue? I’m pretty sure I lost money on interest and I’m pissed because he’s been taking my money and not doing the right thing with it. Advice please. Thank you so much!

    • ANSWER:
      Ok…to answer your question….is it illegal? Yes, it violates ERISA law. What steps can you take to sue him and do you have a lawsuit? He is a fiduciary and in order to sue him you would have to have a class action lawsuit and that would be very very very expensive. You would not be able to get your attorney’s fees paid for so not worth it to you…ERISA attorney’s costs are extremely high as it’s very specialized field. However, the DOL (mentioned in first response) can sue him. Gather up all of your paystubs and compare them to find out exactly which paychecks were not depsoited within 5 days of the payperiod. Then go to the EBSA website’s online calculator and plug that information in. The loss date should be 5 days after the paydate. Make the recovery date 2 weeks from today. Put in every paydate that was late or missed. Once you get that entered you should send him a letter with a copy of that printout stating that you expect that amount to be deposited along with the corresponding interest. Do not threaten him with any legal action implied or otherwise…just ask him to deposit it as of that date that you used as the recovery date. Send your letter certified mail return reciept requested so that he can’t claim he never got it. My guess is that once you provide that information and he knows you’ll go to the DOL (it’s on the printout that you got it from the DOL calculator) he’ll put your money in. However, no guarantees that he’ll do the same for the other employees. Up to you to decide whether you want to push on their behalf.

      but you won’t get any extra and there aren’t any penalties. Basically if you go to the DOL it’s the end of that plan…he’ll have to put the money in, then terminate it, and not run any more 401ks. Not a whole lot more….unfortunately unless he refuses to pay or it’s a significant amount of money (millions). But, if after 2 weeks he still hasn’t deposited the money then immediately go to the DOL. they’ll ask you to provide all your detail and they will begin making contact with him.

48. QUESTION:
    401k transfer of funds tax advice?
    So I have a unique issue and my bank said I should consult a tax professional for which I plan on doing probably no matter what I get as an answer to this question. But I asked the question as to where I should get tax advice for it and everybody wanted more detail to solve it so I’ll give it a shot.

    I had a 401 for a previous employer with like 10k in it. When I left that company the bank rolled it over into an ira. A year later I decided I should take the money and roll it into what was my current employers 401k plan. So I filled out the necessary paperwork with the bank and they sent me a check to give to the holder of what was my current 401k. This happened in December 2009.

    Well I never ended up giving the check to what was my current employer as I got fairly busy and ended up switching jobs again. At the current time I wish to take the money out as cash to pay off my credit card bill which has gotten rather high during this bit of transition. Thing is the Bank closed the IRA when I asked for the check in 2009 and reported it to the IRS even though it was never cashed. They said I could fill out paperwork open another IRA with the money then cash it out. They told me they think that I should have filed this on my 2009 returns but I did no such thing since the money didn’t change hands from my perspective in 2009 I just received a check that was never given to anyone so no money changed hands, not to mention I wasn’t going to attempt to cash it then just roll it over so there wouldn’t have been any changes in income even if cashed.

    Anyway the question is do I have to file an amended return for 2009 stating that that account was closed? If not, I should be good to open up the new IRA with the same money then cash it out and file it on my 2010 return I think.
    ok… I’m ok with the penalty… But the check is no longer good and the bank is telling me I need to open another account to get the money. So if I open another account then cash it out does that count as withdrawing the income twice? I’m ok with having to file an amended return as long as I get the money.
    also my conversation with the bank said that the 60 day rollover rules does not apply to direct rollovers or direct transfers

    • ANSWER:
      if they sent YOU a check and you didn’t deposit it within 60 days into another tax deferred retirement account, it has already been treated as a taxable withdrawal and if you are under 59-1/2, you will owe 10% penalty on top of income taxes (at whatever rate bracket you wind up in after adding that ,000 to your other income this year. whether yuo cashed it or nnot is irrelevant. you will be getting a 1099/1098 for teh distribution and since you won;t be able to prove you deposited it within 60 days, it will be a taxable distribution

      plus, with the check being > 6 months old, you may also have problems depositing it

      it way too late to put that money into any kind of retirement account now – you blew it big time

      I don;t think any 401k plan would have allowed a rollover from an IRA anyway

49. QUESTION:
    I’m very worried about my 401k does anyone have any advice about what I should do?

    • ANSWER:
      You need more details (aka your age and how much it has dropped).

      If you’re under 45, don’t worry about it. This downturn won’t last forever… eventually things will pick up again once these financial institutions start to make sound investment decisions again.

      I’m 25 and mine has dropped nearly 25% in the last two years. I’m actually excited about it because now I’m buying shares at a much much cheaper price and, in the long run, they’ll go right back up.

50. QUESTION:
    advice for 401k for the short haul–retire in 5 or 6 years?
    i have trowe price through employer, he matches and makes yearly bonus contribution. plan is only 5 years old. i’ve invested in international, large blend, health and natural resources. 18% return since inception, but the portfolio is small, my contribution minimal. this month i started contributing maximum, for tax reasons and for future. i plan to continue this for the next 5 years, pay off debts, clean up finances before retirement. but now the investment isn’t ‘play money’, it’s serious. i added bonds to the portfolio, but the advice i read is for long term view – this doesn’t apply to me. how should i be allocating and protecting this investment?

    • ANSWER:
      Invest in a “target” retirement fund…five years out.

      “Target Retirement Fund 2013″…or just get as close as you can.

      This will give you diversity and allocate you properly, given your time horizon.

      It will also re-balance your portfolio…as you get closer to your retirement date.

      Good luck.