401k Company

Frequently Asked Questions

1. QUESTION:
   Is it normal for a 401K company to charge a fee for a rollover?
   I got a new job and the old 401K company wants to charge me to rollover to the new plan. I’ve never been charged a fee for this before. Anybody?

   • ANSWER:
     Yeah that’s normal – but it is still a total ripp off. You shouldn’t be charged that if it is an involuntary cashout though.

2. QUESTION:
   How do I find what 401k company we use?
   I work for Buncome County Schools in NC how do I find what company we use for our 401k plan. No one in the front office seems to know. Or if you can find it!…haha I have searched everywhere…anyone want to help look?

   Thanks

   • ANSWER:
     You are a public school employee and would have a 403B plan. Some 403 plans are rip offs where you have to pay handsome fees to invest. I would talk to the union if you have one.
     Many plans have 4 or more preferred providers. Find the one with the lowest costs. I would recommend putting money in a Roth IRA before a 403B plan in most cases.

3. QUESTION:
   If my company is not matching, should I enroll in their 401K?
   Everybody says that you should enroll for lowering taxes but my husband is self employed and has more losses than profit and we file jointly. So my gross income being K/year and him having about [FAQ-QUESTION] income (his income equals his losses), would I still benefitiate of enrolling in my company 401K? Would my taxes decrease a lot?

   • ANSWER:

4. QUESTION:
   Is it OK to borrow against your company 401k?
   I want to know if it’s ok to borrow against your 401k. I invest at 3% and my company matches me dollar for dollar. I want to use it for Christmas on my children. I don’t really know the rates and little naive. So can anyone help out. Thank you.

   • ANSWER:
     The most important gift you can give your children is to instill the need to live within your means, save for the future and that happiness isn’t some junk bought from the store that is quickly forgotten.

     This is not a we won’t have Christmas this year, but have it on a very strict budget. If there is just no money between now and Christmas to be had, you can’t afford to pay back what you borrow either.

     Then for next year, you start the family on a Christmas savings plan. Have everyone make contributions, things like pocket change, and so on. Keep track of accounts and such. Then next year you give each child everything they’ve saved plus a portion of what the family has saved (that would mean the parents) with one thing. Not over half the total can come in the last three months of the year.

     Many if not most people go through life moving and reacting only to the closest crises, never getting ahead, never ready for even the predictable things. If you use this event to teach your children how to get off the crises treadmill, plan for their future and live within their means, you will materially improve their lives and satisfaction with life. What a wonderful gift.

     Marv

5. QUESTION:
   Over-payments: Can the employer make you pay for 401K company match if they overpaid you for almost a year?
   Checking if you are paid 90 cents more than your suppose to and the company makes you pay it back, can they take the money you and them put into your 401K and what about pension.

   • ANSWER:
     Anytime a company overpays you, you have to give it back.

6. QUESTION:
   Do companies always match 401k with company stocks or do they contribute to their general 401k plan they have?
   If a company does not trade stock but they have a K plan plus, are they contributing into their investments they have established. Is Profit sharing the same as 401k.

   • ANSWER:
     profit sharing is a general term to describe the process whereby a company shares part of their profits with employees: it generally takes three forms-some companies use one or more types-

     1. cash bonus
     2. company stock
     3. deferred paln (401k is a specific type of deferred plan)

     options 1 and 2 are taxed immediately upon receipt, so employees get less from them. deferred plans have strict rules on withdrawing the funds, and penalties usually, but are tax-deferred-you dont pay income tax on the money until you take it out. the idea is that you keep these until retirement, when you have lower income and a lower tax bracket, so you are taxed at a much lower rate. plus, over a lifetime of employment these can earn dividends because they are invested.

7. QUESTION:
   Year End Deadline for Participant Contribution to Company Sponsored 401k Plan?
   For tax purposes, what is the deadline for a year end participant contribution to be deposited in a company 401k plan?

   Also, what determines the date that a 401k contribution made by the participant and deducted from my bonus check was “effective” for tax purposes? Is it:

   1. 12/28/06 which is the date that the bonus check was issued (net of the 401k contribution I requested to be made),

   2. 1/3/07 which is the date when my employer actually wrote the check to make the contribution, or

   3. Some other date?

   • ANSWER:
     The 401K contribution will reduce box 1 of your 2006 W-2. It is a 2006 contribution since it was withheld from your 2006 income.
     Your employer actually has until the 15th business day of January 2007 to make the deposit into your 401K investment account.

8. QUESTION:
   Laid off several months ago, can not get 401k unless resigns from company and lose unemployment. Is this true?
   Co. had a lay off several months ago, we are on “call back for 1 year” and can not get 401k unless we turn in resignation and thus lose unemployment. Can a company do this?
   Also, company going ‘dormant” in december and laying off remaining employees (putting them also on call back). Can they still hold the 401k ? Parent company in another state will remain open.
   Thanks for any answers.

   • ANSWER:
     You are in a difficult situation. Yes unless you sever ties with the company you cannot get the money. I would be sure to save some statements in case there is some hanky panky.

9. QUESTION:
   Can I move my 401K money into Roth IRA after I got laid off from my company ?
   I’m 57 year old and have 1 Million Dollars in my 401K with my current company. My job will be terminated at the end of this year 2008. Can I move money out of my company 401K account into a new Roth IRA account with a Discount Brokerage Firm ? If I can do that, what is the tax consequences ?

   • ANSWER:
     It would be a 2-step process.

     First you transfer the 401(k) to an IRA. (Not taxable.)
     Second you decide when, how much and how often you want to roll the IRA money to a Roth IRA. (Taxable.)

     Each time you roll money over, you start a new 5-year clock on that particular Roth contribution. (If you withdraw any of the money before 5 years is up, you owe a 10% penalty.)

     Personally, I sit down and look at my financial situation for the year. If I am in the 15% tax bracket, I move as much of the money to a Roth until I’m touching the 25% tax bracket.

     Since I put a lot of the money into the 401K in the 25% and 28% tax brackets, I feel like I’ve beat the system. I had to switch careers and start over on salary, so I had quite a bit of 10% and 15% tax bracket to work with the first few years. Now it depends on how much capital gain I’m recognizing and whether or not I’m itemizing….

     My ultimate goal is to lower my total IRA assets to a reasonable amount by the time I retire so that I pay 15% tax in retirement as well.

10. QUESTION:
    should I change my 401k company stock investment when the stock is dropping?
    My company matches dollar for dollar up to 10% of my income that I invest in company stock. The stock has been dropping as of late and I have a negative return. Would it be wise to change my investment into something more secure until I see the first sign of the stock raising?

    • ANSWER:
      Point one: the rule is buy low, sell high in investments that you know & understand. Do not invest in things you do not know or understand.

      Point two: You are exceeding the limit placed by general investing advice for investing in the company you work for. The top limit is 10% of net worth (Not income. Net worth) There are some really good arguments (in my opinion) that say you should limit your investment to less than 5% of your net worth UNLESS you are in a position to change company direction or see inside the preparation of financial documents (Top management).

11. QUESTION:
    Old 401K company wants to charge me a fee for a rollover?
    I got a new job and old company wants to charge me to rollover to the new plan. Has anyone else ever been charged for a rollover?

    • ANSWER:
      Yes, it sucks, and I never used them again.

      Roll your 401K over into a Traditional IRA instead, at a company that has no fees for such a thing like Scottrade.

      That way you can also pick your own stocks and mutual funds.

12. QUESTION:
    How long does my employer have to send payment to the 401K company after it is taken from my pay check?
    On my pay stub I get taken $$$ out. When does my employer have to send the money to the 401K manager?

    • ANSWER:

13. QUESTION:
    I have a loan from a 401K but my employeer switched from a PEO to a payroll company and the loan won’t roll?
    The company I work for switched from a PEO (place of employment organization (where technically I worked for this group in order to get better benefit) to a standard payroll company so now I technically work for my employer. The payroll company has a different 401K company that we now work through but the loan won’t transfer over. The financial agent says it’s a Trust to Trust so it won’t go over. He says in the eyes of the financial world I quit one job and started working at another. He suggests I borrow the money from someone to pay the origional loan and then take a loan once the money transfers and then pay that person back. Or just let the loan default and let the company keep the money (along with taxes and pentalites). Is this right? If I didn’t do anything why should I get screwed?

    • ANSWER:
      He’s right. You should borrow the money otherwise you are going to owe $$$ at the end of the year. See if you can borrow for 2 months until you get your new plan/loan set up.

14. QUESTION:
    What is the penalties for an early withdrawl of you told 401K and company cash pention?
    Due to the outsourcing of my companies manufacturing business (IMATION). I am being laid off, but as part of my severance package I am able to withdraw my cash pension, plus whatever I contributed to 401K which totals around ,000.00. What would i end up paying if i withdraw all this and not roll it over?

    • ANSWER:
      YOu should roll over your pension and 401 k to a qualified plan. Your bank’s financial advisor can help you with this. Do not cash them out. You’ll pay up to 50% in taxes and penalties by the government. Ask an advisor before you do anything. They are free to you initially. Good Luck.

15. QUESTION:
    Are there ways I can get my money from my company’s 401k profit-sharing plan before I leave the company?
    I am young and planning to work in another company that, unlike my current employer, has no 401k profit sharing plan. I am just wondering if I could still benefit from my 401k plan once I left the company. Perhaps I will still be able to contribute to this plan from my pocket?

    • ANSWER:
      It really depends on your company’s 401k Summary Plan Description (SPD) which are the guidelines to your plan. Current IRS laws state that if you have less than ,000 in your 401k you must withdraw the funds either as a rollover to another plan/IRA or cash it out. If you have more than ,000 you will be able to leave it in the plan.

      Personal contributions to a 401(k) are not permitted since it would not be tax free dollars going into the fund.

16. QUESTION:
    Should I invest in 401K even though company is going out of business or Roth IRA?
    I just got eligible for our companies 401k plan that matches 2 percent and vested over 6 years. Today I heard that they may have to shut down in the next 4-12 months. Should I invest in this plan or just start my own Roth IRA. Thoughts… suggestions…tax issues?

    • ANSWER:
      Do both if you can – the company match is a guaranteed return that is essentially free money for you.
      Put in at least enough to get the full match. If in fact your company folds, then roll it over into an individual IRA at a discount place like Vanguard, Fidelity, or T. Rowe Price. Start a Roth there also. They are all good but Vanguard is best for lower fees.

17. QUESTION:
    Has anyone heard of a company keeping 401k match portion from old employee for 5 years after leaving job?
    she just started a new job and was planning on rolling over into an IRA. Her old HR people said they hold the company match portion of her 401k for 5 years until SHE writes THEM requesting the money, or they get to keep it.

    • ANSWER:
      Yes, that is standard procedure. She keeps the money that she put into it but the matching portions are determined by the amount of vested time with the company. She has to meet eligibility requirements. Also remember that the money was tax differed & she must deal with both the tax issue & any early withdrawal penalty.

18. QUESTION:
    Is it possible to move my 401K to a personal IRA without first leaving my company?
    I am enrolled in our company-sponsored 401K with limited choices for funds. I would like to move it to Fidelity for a broader selection to suit the market situation. The only way I hear to do this is to leave the company, and I would rather not do that.

    Thank you!

    • ANSWER:
      talk to your human resources department or payroll department to know for sure.

19. QUESTION:
    How old must you be to enroll in a 401k within your company?
    Hi all! My son’s girlfriend is only 19 and her company has a 401k program. She was told that she can not contribute until she is 21. They live in Illinois. Does anyone know if there are age restrictions on beginning a 401K?

    Thanks in advance for your answers!

    • ANSWER:
      The statutory eligiblty set by the IRS for 401(k) plans is 1 year of service (defined as working more than 1000 hours) and age 21. The plan must also provide two entry dates, one at the the beginning of the plan year or six months following the completion of the requirements . From there companies can pick their own eligiblity requirements, as long as it does not exceed the IRS statutory.

20. QUESTION:
    What happens to a 401K when the company is sold to another that does not continue it?
    The company has gone through three “names” . Only the original name had a 401k plan.

    How do I obtain information on that old policy and withdraw the money?
    How do I find out the status?

    • ANSWER:
      Take your last statement and go to a financial advisor (like at T Rowe Price, Morgan Stanley, Raymond James, or a small independent). You need to get this rolled over into a IRA ASAP.

      You don’t want to lose any of the money you contributed, and you are in danger of that. And if your company has already changed names twice, you may have already lost some due to the time limits on rollovers.

      Go!

21. QUESTION:
    when should i contribute to my company match 401k?
    should i contribute to my company match 401k as soon as i get hired? what if i get fired a year after.. do i get to keep any of the company contribution or do i only get 25% of the company contribution? or should i wait till after working at the company for 4 year till i get to keep 100% of the full company contribution?
    please explain to me about the company vested contribution… will i get to keep 100% it if i choose to move my 401k to IRA instead of cashing out after 1 year?

    • ANSWER:
      As everyone has said, start investing now. I assume that your company’s vesting is 4 years – that does not mean 4 years from when you start at the company – it is 4 years from when you start putting money into the plan. If you wait 4 years to start contributing, you would vest in 8 years.

      As for how much you would get, it depends on the vesting schedule – there are two types of vesting, graduated and cliff. If you company has graduated vesting, you would vest in an addition 25% per year, so after year one, you would be entitled to 25% of the company’s contribution, after year two, you would be entitled to 50%, and so on. Under a cliff vesting schedule, you would not be entitled to any of the company contribution until you had contributed for 4 years, and then you would be entitled to100% of the company contribution.

      Talk to your plan administrator for the answers to these questions as they pertain to your company’s plan.

22. QUESTION:
    How do you maintain a 401K if your company closes?
    If my company closes should I close out my 401K or try to maintain it somehow?

    • ANSWER:
      You can roll it over into a new 401k if you get another job that offers it, or you can roll it into an IRA.

23. QUESTION:
    What do to with my 401K from the company I am no longer employed with over a year?
    I am no longer employed with the company and there are no more contributions to my 401k, what are my options and what would be a good decision? perhaps, I could use the money to pay off my loans but would that be a good decision? The company is T.Rowe Price, should I stay with it or look for another company? How does it compare to other companies and what to look for if I decide to Convert it into an IRA?

    Thanks for your help.

    • ANSWER:
      That’s a no-brainer: roll it over into an IRA. T. Rowe Price is good. So is Vanguard, if you want to stay with a mutual fund company. You’ll lose AT LEAST 30% to tax and penalty if you withdraw the account.

24. QUESTION:
    What recourse do I hv against changes in 401k company plan? The “team” deleted the hi-performing Sector funds.
    Public US company is changing manager from Fidelity to T. Rowe Price. My Sector funds in Fidelity are named “T Rowe Price” but are not in the new 401k offered when the whole thing becomes managed by T Rowe Price. The company team claims that they have the “fiduciary” responsibility to “protect” their employees against those who ‘don’t have the financial astuteness” to make the right decisions within their funds. The new funds only have history of 5-9% return rates, but the sector funds have netted me year over year return of 26% as I watch it and understand what I’m doing. Other well-informed employees who understand finance are also upset. We want the company match, but need to do the 401k with TRP in order to get it. What can we do after the VP of HR has said ‘NO’? Do we file Class action suit? Report to some other finance authority? “Harp” on the sales reps that come to visit us? Other suggestions?

    • ANSWER:
      You have not gone the the president yet? That would be your next step. But in order to do so to have the greatest impact you perhaps should get a petition signed first by all those who are of like opinion as you. You will need a significant number of signitures. I do not know how large your comany is but lets say there are 300 employees at your location, about 50 signitures should be sufficient. The petition should be diplimatically worded but should state the case explicitly. A class action suit would more than like get you fired.

      I may be out of line with this suggestion, but there is the possibility that the “new” plan was developed because it entailed a better deal for the company than the old plan. Read that in whatever syntax you wish.

      Unfortunately, some 401k plans are not very good in the variety of choices that they offer. The company does however have a point. They do have a fiduciary responsibility. T Rowe Price does offer some excellent funds. The Capital Appreciation Fund is one of my favorites. But no it will not generate a 26% return. On the other hand in a bear market it most likely will not loose you 50% either. This particular fund went through the last bear market with the worst return being +3% for the year. That was when most of the sector funds were loosing 50% of their value.

25. QUESTION:
    Can a former company transfer my 401k to another fund without my consent?
    My first 401k from many years ago seems to have switched companies and investment funds. Is this possible? Can a company sell my 401k investment and transfer it elsewhere without my consent?

    • ANSWER:
      yes. they probably switched their current plan as well. you are lucky they didn’t just cash you out. that creates all kinds of tax headaches.

      to avoid it in the future. roll it over to an IRA. manage it yourself. you can buy the same funds that were in your original 401, if you want to.

      contact a discount broker like schwab or ameritrade. they can walk you through the process to avoid taxes or penalties on the transfer.

26. QUESTION:
    Does it make any sense to continue contributing to a company 401K right now?
    The stock market seems to set new lows every week and it just seems that I could be using that extra money in my paycheck every week instead of throwing it down the drain, which is what it feels like I’m doing with my 401K contributions right now. Does it make sense to continue making contributions right now? Should I reduce them? Should I start them and then resume them later when the market gets more stable? Thanks!

    • ANSWER:
      Let me put it simply, by continuing to buy stocks as the stock market continues to go down, you are buying more shares per dollar. If you stop doing this until the stock market goes up, you lose out on cheap stocks. Right now is a bad time to buy bonds since they are basically 0% interest so you would not make any money. Finally, what will happen when you go to retire and you have no money saved up and social security is paying less than it is today?

27. QUESTION:
    can a company charge you for taking out a loan on your 401k?
    I recently took out a loan on my 401k and the company I work for is charging me a fee every week so I am paying back the loan, a set up fee, the amount that normally goes into my 401k, and this weekly fee. I would like to know if they are supposed to do this. I would also like to know if it is legal for them to charge this weekly fee. Any answers would be greatly appreciated, also if you know where I could find this information in writing that would be great too.
    I am not talking about the interest, I am taling about a seperate fee that the company is charging.

    • ANSWER:
      They are not loaning you your 401K money…they are using that for collateral. You cannot take out your 401K money without penalties until you are of retirement age. The money they are charging you is interest and fees for letting you use THEIR money. If you default, they’ll take your 401K money.

28. QUESTION:
    Have not withdrawn my 401K from a company that folded years ago?
    I have invested into a 401K back in 1998 and the company I worked for went under years ago. How can I find my unclaimed investments ? The name of the company is Computor Aided systems Inc. or C.A.S.I.

    • ANSWER:
      You should contact the plan custodian listed on the documents you got when you signed up for the 401k plan. The assets of the plan should have been seperate and apart from Computer Aided Systems Inc. which filed Chapter 11. You should still be receiving statements on your plan and this contact information should be listed.

      If you can’t find anything you might try contacting the Attorneys who represented the firm in Bk and ask what happened to plan assets:

      Debtor’s Attorneys
      Alan Tippie
      Elissa Miller
      SulmeyerKupetz
      333 South Hope Street, 35th Floor
      Los Angeles, CA 90071

29. QUESTION:
    Question about 401k savings. If the company that my 401k is through goes broke, is my money gone too?
    My 401k is in a well- known company, and all of the mutual funds within my plan are also managed by this company. I heard that this company recently laid off a lot of its workers, and of course there are all kinds of financial companies going bankrupt left and right.
    If this company goes bankrupt, what happens to my money in the mutual funds?
    Again, this is a big well-known company and has families of mutual funds of all kinds, but i won’t say the name.

    • ANSWER:
      Your money is invested into the market, not into this particular management company. If the management company goes bankrupt, then your company will choose a new management company for their 401k’s, but your money won’t be gone.

30. QUESTION:
    If my company offers a 401k and I choose not to participate can I make tax-deferred contribution to my IRA?
    I don’t like the investment choices offered by my company’s 401k and would like to stop participating. If I contribute to my IRA would the contribution be tax deferred?

    • ANSWER:
      Refer to IRS Publication 590, page 15. I’ve put a link below. If you are covered by a retirement plan, regardless of whether you choose to participate, you will have a reduced or no tax deduction depending on your income level.

      There is a table on page 15 of IRS publication 590 which shows you how to figure out whether you can deduct an IRA contribution, and if so how much you can deduct if you employer offers a retirement plan.

31. QUESTION:
    Why is my company renaming my 401k plan to a Retirement Savings Plan?
    After a recent merger, my company is renaming my 401k plan to a Retirement Savings Plan. It seems a little odd. What kinds of legal issues, protections, ect. do I need to consider?

    • ANSWER:
      these other people are on drugs…I’ve seen 401k plans named retirement savings plans and even profit sharing plans. The name means absolutely NOTHING! Check out the plan document, or summary plan description, of the new plan and see if the provisions are the same. If so, then sleep comfortably. If not, then they will give you the opportunity to roll your money over into an IRA instead of into the other plan. Your choice if you want to do that. Generally when a merger occurs the companies also merge retirement plans. This is likely what happened in your case.

      And btw no special training is needed for directing the investments of any type of plan. You simply need to invest prudently….I’ve seen small business owners invest for their participants and do quite well…and I’ve seen those knuckleheads with licenses do worse than they would have if they were simply in a 60/40 Equity/Bond split.

32. QUESTION:
    What company should I use for 401k plan in my start-up?
    I want to sign up a company for offering 401k to my employees (currently 4 inc myself and planning to grow to about 15 by end of this year). Any recommendations?

    Does anybody have experience with http://www.employeefiduciary.com/?

    • ANSWER:
      No experience with that company….and there are a ton of them out there just like them. Personally? I’d avoid any of them that says they are the low cost provider because they simply offer an off the shelf product. I would especially avoid one that uses comparisons on their webpage like they do. I’m sorry but if your plan has million in it then no way are you paying 1.4% Investment Management Fees or any 12b1 fees. If you are then you are a terrible businessman…don’t fall for the draconian comparisons that a company like this throws out!!! At any rate, a company like this may or may not work for your company…but I know that if I was the fiduciary (plan sponsor) then I wouldn’t be using any of the 3 comparisons that they use. I’d hire a TPA to set up a plan that works for me. I’d hire a financial advisor seperate from the TPA to make sure that my employees are receiving good financial advice. I’d make sure that the recordkeeper provides me access to funds without 12b1 fees and institutional class funds with low expense ratios. And yes, you can get these with startup plans you just have to shop.

      Look…if you’re planning on growing at that pace then a straight vanilla plan is not going to work for you. You’re going to want a plan that is flexible enough to grow with you and provide YOU with the maximum benefit. This is not a benefit for just your employees. It’s a benefit for YOU! What good does it do to save k a year on expenses if you turn around and give it right back to the staff in employer contributions? Why not set up a plan that saves you k a year in expenses and provides you a benefit that is large enough that the tax savings you make on the employer contributions for YOU, the business owner, funds the contributions for your staff in it’s entirety. Why pay to Uncle Sam (or to a 401k “advisor” what you can pay to yourself or your staff).

      Recommendations? Use your local phone book and look for third party 401k administrators. Interview at least 6 of them. Go with one that you trust that sells you consulting services/adminstration services only. Preferably they will bill you without regard to plan assets. If they do bill according to plan assets then I’d avoid them….the work is the same no matter how much money is in there. Also be wary of one that tries to sell you on a certain fund family (even american funds!) or insurance company. They have a vested interest in that investment and receive $$ back somehow. There are plenty out there…just look for one.
      And remember, what works for one company (individual) does not work for another!

33. QUESTION:
    Do they have to let you rollover your 401k to a new company?
    If you quit a job and the new company has a 401k, so they have to accept your 401k from a previous employer or can they deny it? Any links would be appreciated.

    • ANSWER:
      It depends on your new employer’s plan document. If your employer is saying they do not accept rollover funds, you can ask them for a copy of the “Summary Plan Description” which is a government mandated easier to read document that describes the provisions of the plan. It will clearly state whether or not rollovers are permitted into the plan. It is very rare any more for your new employer not to accept rollover funds from a prior 401k because generally it is beneficial to your new employer’s plan to have more dollars. The more money your employer’s retirement plan has, the better deal they can get with the 401k provider. If your new employer’s 401k plan does not accept rollovers, don’t fret! Simply open up a Rollover IRA with a company (I prefer Vanguard… low fees, easy to use, no sales people bothering you!) At somepoint you may get another job with a company whose plan does allow for rollovers and you can move all of your money into one plan.

34. QUESTION:
    Can I transfer my company 401K savings to a ROTH 401K w/o penalty?
    Im just not getting the returns I would expect from the 401K plan I have with my company and feel I could benefit from rolling over the money into something else. Any suggestions would be greatly appreciated. I want to do this without incurring any penalties.Thanks

    • ANSWER:
      Actually..

      Here’s a link.
      Looks like the only thing you can convert to a ROTH IRA is a traditional IRA.

35. QUESTION:
    Is it a bad time to sign up for my company’s 401k plan?
    Just got my enrollment info for my company’s 401k plan. I’m not too smart on this stuff, so I just question if its a bad time to sign up with the economy in the shape its in.

    • ANSWER:
      I’d only contribute enough to get the max.

      If your employer will match 6% of your pay, then I’d only contribute 6%.

      Don’t invest all of your money in company stock however.

36. QUESTION:
    401k with company match contribution are all traditional 401k?
    is it true that if you have a 401k with company match contribution, it is for certain the 401k is to be a traditional 401k? therefore, we cannot do a direct roll over to a Roth IRA incase of leaving a job?

    I cannot tell if my 401k is a traditional or a roth, how do i tell?

    • ANSWER:
      A tradtional 401k deducts money from your paycheck before taxes. A Roth 401k deducts money from your paycheck after taxes. Your employer should be able to tell you if you have a Trad. or Roth but you can look at your paycheck at the deduction.

      If you have a tradtional 401k and leave your employer you can roll it over into a tradtional IRA without penalty. If you roll it over into a Roth IRA you will have to pay tax on it. FYI, 2010 you are allowed to roll over a tradtional IRA into a Roth and pay the tax penalty over 2011 taxes and 2012 taxes.

37. QUESTION:
    What should I do when my company has limited number of mutual funds in 401K slection to choose from?
    I know that people are saying that you should buy those mutual funds which give higher returns. But when my company offers limited number of mutual funds and all are doing bad. What should I do with my 401K investment? I can not move my 401K to other company until I leave my present job. Should I stop contributing to 401K?

    Best wishes,
    M. Chowdhury
    www.amreteckpharma.com

    • ANSWER:
      When the market turns down, I move my money to cash. In our case, one of our options is a credit union fund. I leave it there until the market starts turning back up (which should happen after our sep pullback, but we’ll see!).

      Hope that helps!

38. QUESTION:
    my company recently stopped matching my 401k any suggestions of how i can compensate for this.?
    a 401k without a company match is nothing more then a savings account.should i pull out what?

    • ANSWER:
      No you probably cannot pull it out unless you quit the company. I would consider saving via a roth IRA at this time for you.

39. QUESTION:
    Which 401k provider does my company work through?
    This question may be a little strange, but I entirely forget which 401k provider that my company works through. I work for Anthropologie, which is affiliated with Urban Outfitters and Free People. I’m not entirely sure if they all work through the same provider. I realize that it’s a little irresponsible to forget a detail like this, but I’m 19, and it’s not exactly as though I make much money anyways.

    • ANSWER:
      You either have to ask this question to your firm’s Human Resources area or wait for your quarterly statement from the trustee of the plan,

      This is not information known by the public, only to those that are participants.

40. QUESTION:
    Is there a way to get money out of 401K if my company makes me take a pay cut?
    My company is downsizing so I took a lower position and pay cut for the company…by their choice. I have a couple outstanding 401K Loans that I will not be able to afford with the pay cut. Is there anything that can be done via getting money from my 401K to pay the loans off so I don’t have the payment?

    • ANSWER:
      They can’t lower the interest rate or extend the payment of the loans. You may be able to re-amortize the loans but only if they original loans were for a period of less than 5 years.

      You don’t need to take a withdrawal to pay these off. All you need to do is direct (via written letter) payroll to stop taking 401k loan repayments. Let them know that you understand that your loan will go into default and that the residual amounts will become taxable. If you do this you may want to bump up your withholding because the tax burden will be about 30% of the remaining loan amount.

      Only other way would be to quit and take a distribution because you can’t take a hardship withdrawal for this reason. And, quitting would actually be more damaging to your 401k then the option I discussed above as you would also be taxed and penalized on any withholding amount.

41. QUESTION:
    What are the pros and cons of transferring a 401k with an old company into a new 401k versus an IRA?
    I have a 401k balance from a company I was only with for a short while. I now have the option to transfer it to either the 401k with my new company or just an IRA.

    It seems to me since this won’t be involved in any matching that it doesn’t even matter which way I go. Am I missing anything obvious?

    • ANSWER:
      your new company, of course, will not match the money you transfer from your previous company. If you are a savvy investor, you should transfer your old company 401K to IRA, because you have more control of your money. you can buy any individual stocks from your IRA. If you put all your money to your new 401K, your choice will be limited to the 401K’s choice.

42. QUESTION:
    would you consider it unfair for a company to enroll its employees with their 401k plan knowing?
    its a high turnover job? Knowing that most employees only last 3 months or less on the job and charge them 401k? How many years on the job does an employee have to work for a company before that company’s 401k plan can be of any value?

    • ANSWER:
      It’s a great idea to automatically enroll employees – especially if the company matches. It has value the instant funds are added to it. There was probably a piece of paper handed to you when you got the job that was instructions for opting out of the plan.

43. QUESTION:
    Would you consider it unfair for a company to enroll its employees with their 401k plan knowing?
    its a high turnover job? Knowing that most employees only last 3 months or less on the job and charge them 401k? How many years on the job does an employee have to work for a company before that company’s 401k plan can be of any value?

    • ANSWER:
      When a person gets hired they simply must request to NOT opt into the 401K.
      If the employee does not mention it, by law they will be automatically enrolled.
      You have to sign forms to opt-out…

44. QUESTION:
    Can I transfer my 401k loan from my old company to a new company that has the exact same 401k?
    I took out a 401k loan to purchase my first loan – I got offered a great position at another company that offeres 401k as well, I was wondering if I could transfer this loan over to the new company if I decide to take the job. Thanks!

    • ANSWER:
      You can ask your 401K administrator, but I know the answer: No.
      IRS regulations require company plans to force you to repay the loan or pay taxes and penalties on it when you leave. For the IRS’s point of view, this cuts down on a lot of hanky-panky.

      Sorry to bring you bad news.

      Grandpa

45. QUESTION:
    what 401k company has the lion logo?
    I can’t remember who my 401k is through, but I know that their logo has a lion in it. Kind of vague, but it’s one of the larger companies. Thanks

    • ANSWER:
      You’re thinking of ING.

      http://www.ing.com/

46. QUESTION:
    Can I dump savings into a new 401k to boost my company contribution?
    I qualify for my company’s matching contribution in November and am wondering if it’s possible to dump some of my savings into the 401k initially as a means of increasing the amount of money I get from my company. I’m under 50, so I know I don’t qualify for the “catch up” contribution. Thanks for all answers!

    • ANSWER:
      It depends. It’s possible to get the savings in there by changing your deferral percentage to 100%. However, the match is based upon your eligible compensation multiplied by the matching percentage. They then compare that result with your own contributions and take the lessor amount. So, while you may be able to jack up your own contributions, you’re still limited to the calculated contribution amount. This is determined by the eligible compensation variable. Most plans limit compensation to only compensation earned while eligible. For you that would be compensation earned during November and December. Now, if your plan document has no such limitation???? Then yes, you can front load and maximize a match using your entire years compensation.

      works like this…

      Jan – Oct Comp = 10,000
      Nov – Dec Comp = 2,000
      Match =100% up to 6% of eligible comp.

      Eligible comp calc’d only on comp earned while eligible = 6% of 2000 or 120. So anything contributed over 0 is unmatched.

      Eligible comp = annual compensation with no limitation = 6% of 12,000 or 0.

      That being said, I’ve only seen 1 plan in 15 years that didn’t have the limitation and that plan was mostly family of owner of company.

      Check your plan document to see what it says.

47. QUESTION:
    can a company cancel 401k for certain employees?
    if company has 401K plan, can company cancel plan for 1/2 employees and leave the other half on the plan. if so, what would be the reasons/rationale?

    • ANSWER:
      In a way yes. As another posted noted, companic make sure that highly compensated associates do not contribute more than non highly compensated associates (they go through a yearly discrimination test that makes sure this is ok). If a company has a problem passing this test, they may decide to exclude highly compensated associates from participating in the 401k.
      Who are they excluding? We really need more details to give a more accurate answer to your specific situation.

48. QUESTION:
    one company was bought out by another and that co relocated I want to know what company held their 401k plans?
    Im checking for the company who had ecology systems account before they folded. With so manyh different companies holding 401k whats the best way to locate a forgotten claim

    • ANSWER:
      us department of labor -

49. QUESTION:
    Can you get out of repaying a 401k loan if the company decreases all employees pay rates?
    We borrowed from 401k 3 years ago for a home, recently the company has had to cut back due to recession, and decreased all employees pay rate. Now we can no longer meet our household budget due to decrease but we could if we were paying back this loan. Any laws that allow for hardship? or any other way to quit paying loan without pendties?

    • ANSWER:

50. QUESTION:
    What is the best company to do a 401k rollover with?
    I want to rollover my 401k to a IRA, but don’t know which company to pick. Please help!

    Thank you!

    • ANSWER:
      401(k)s… real money losers. I feel sorry for you. Get out quick! I hope you find one soon. Unfortunately, I cannot help, because my country’s economy has left me too broke to do more than scrape to survive, rather than actually save and invest.