401k Retirement Plan

Frequently Asked Questions

1. QUESTION:
   How do I calculate earned interest for each month for a 401k retirement plan?
   This is for a project for my Economics class, and I’ve used as many resources as I can to find this… and I’m stuck.

   The hypothetical situation below explains what I’m supposed to do:

   After initially picking a 401k plan (upon research I chose a Bond Mutual Fund for this), I’m supposed to “keep track of my earned interest for my mutual fund” per month.

   My monthly income is 00 and I plan to contribute 8% of that to the 401k, which would be 0/month.

   How do I figure out the earned interest per month? I have no idea what the interest rate is or how to find that. I’ve researched online and got 5.25%, in which I have no idea is correct.

   Thanks in advance for any help you can provide.

   • ANSWER:
     It appears that rather than projecting future gains what is being asked for is the previous month’s gain. Thus, on the first day you deposit 0. One month later, before you make your next deposit, you calculate your gain for that month.

     Example:
     Start of month 0
     End of month value 1

     Gain (earned interest):
     1-0 =

     Rate of Return:

     /0 = 0.005 per month
     0.005 x 12 = .06 (6%) on a yearly basis.
     ____________

     Next month the starting value is 1 (Last month’s ending value (1) plus your contribution (0)).

     Do this for each month. The result for each month will likely be different and some months may even show a loss.

     Realistic results might look like this:

     Month #: 1 , 2 , 3 , 4 , 5 , 6
     Interest %: 6 , 4.3 , 11 , -9.2 , 0.2 , 4.3

2. QUESTION:
   Do you have a 401K Retirement plan with your Employer that is stock based?
   If so, then Obama’s plan of raising the Capital Gains Tax will affect the buying of stocks. What happens to the Market and YOUR Stock based 401K(which is what 95 percent of 401K is based on) when Obama is elected? Do the math and cancel enrollment in your 401K if Obama is elected.

   • ANSWER:
     I dont think it will be that bad. I think long term cap gains are taxed at 15%, if it moved up a couple percent I would not be happy but could live with it.

3. QUESTION:
   What is the importance of coordinating investments within and outside your 401k retirement plan?
   Can you describe a situation where this would be important. Thank you for your help with understanding this kind of retirement plan.

   • ANSWER:
     I don’t know your age, but eventually you may want to include bonds in your asset allocation. The type of bonds you buy (or bond mutual funds) depends on the tax status of the investment vehicle. Treasury strips (zero coupon bonds) and inflation-protected bonds are easier to handle (tax wise) in a tax deferred account – it makes your tax situation easier; and junk bonds so you defer tax on the high yield. Municipal bonds should be in a taxable account (since they are not taxable). If you put a muni in an IRA you convert tax free income into taxable income – bad move.

     Stocks held long term should be in a taxable account so that you control the capital gains timing and get a lower tax rate for the capital gain. A k capital gain in a 401k is taxed as ordinary income when distributed, which is OK if you’re in a much lower tax bracket after retirement (that was true in the past, but may not be in the future). In a taxable account pick mutual funds that are tax efficient, like index funds; put the fast trading mutual funds in an IRA to shelter the short term gains that trading generates.

4. QUESTION:
   what is the difference between a 403b and a 401k retirement plan?
   I recently remembered about a retirement account from a former employer. it is described as a 403b (tsa) pension plan.

   • ANSWER:
     A 403b is used for a not-for-profit company, otherwise it is exactly the same as a 401k.

5. QUESTION:
   does anybody know if there is an retirement plan besides 401k?
   I know that the 401k plan is like stocks and it goes up and down and I do not want that so i was jus wondering is there an ira or a retirement plan that is interest based only.

   • ANSWER:
     A 401K can be be invested in a fixed income investment or bonds or any number of investments besides stocks.

     IRAs can be invested in federally-insured savings or certificate of deposit accounts in addition to various other forms of investment.

     These retirement accounts are arrangements that offer tax advantages. The types of investments you can choose fall within that arrangement.

6. QUESTION:
   Can a judge reach a retirement plan (401k) after a divorce is final when both parties waived interest?
   My ex-spouse under an MSA in California waived our respective interest in the others 401k plan. Can my ex-spouse tried to tap into my plan years after the divorce finalized?

   • ANSWER:
     Nope. Has to be dealt with during the proceedings, once the divorce is finalized, it is over.

7. QUESTION:
   What are the tax liabilities of taking an early distribution from a 401k retirement plan?
   I am rolling most of it into a tax deferred I.R.A., but am considering taking a portion of it to pay some bills. Suppose I took ,000 to pay bills. How much of that ,000 would I have to pay back in the form of early withdraw penalties and taxes?

   • ANSWER:
     You will indeed pay a 10% penalty on your tax return. In addition, the K will be added to your gross income for the year, and may push you into the next tax bracket. Normally, most of us would figure 28% fed, plus 6% state, plus 10% penalty. So roughly that ,000 may end up costing you and additional 00 or 44% but it could be more in a higher bracket.

8. 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.

9. QUESTION:
   i did not contribute to company retirement plan or 401k. Can I contribute to IRA?
   I joined new employer in Sep,2005. I was eligible to join 401K from Nov2005. I did not contribute to 401k plan. Box 13 in my W2 (retirement plan) is checked.
   I am trying to claim my ,000 IRA contribution. Turbo tax is not giving full deduction of ,000. It is giving only 0 deduction from my Total Income. Why do not I get 00 IRA deduction.
   Thanks inadvance.
   Ram

   • ANSWER:
     Income limits apply when box 13 is checked.

10. QUESTION:
    Am I able to qualify for a deductible IRA if the only retirement plan my company offers is a 401K?
    My question concerns only a fully deductible IRA, and the confusion over the IRS wording “to quality….you must not be eligible to participate in a company retirement plan”. My company does not offer a pension plan , but does offer a 401k plan, so does that disqualify me from a deductible IRA ? Basically the question comes down to the defination of a “company retirement plan”.

    • ANSWER:
      401k plan is considered a company retirement plan for what you are asking about. Note: actually participating is irrelevent. Your eligibility to participate is what drives this. You still may be able to qualify for it if your spouse (if any) doesn’t offer a plan.

      Of course this assumes that you are over the income phaseout limits. I assumed you were as you specifically mentioned the wording and didn’t ask the typical vague question.

11. QUESTION:
    How would having a 401K retirement plan affect apply for unemployment benefits?

    • ANSWER:
      It doesn’t. No assets do. Unemployment is an insurance program, like Social Security. Ir’s basically the same as health or car, or home owners insurance. When and if you become eligible to collect, your other assets have nothing to do with payout.

12. QUESTION:
    Is it a good deal to borrow money from your 401K retirement plan?

    • ANSWER:
      if you need the money to get an operation to save your life, yes.

      otherwise, bad idea.

13. QUESTION:
    Is a roth 401k better than a regular 401k plan for a 21 year old? I dont know anything about retirement plans
    Is a roth 401k better than a regular 401k plan for a 21 year old? I dont know anything about retirement plans. But the lady giving the presentation at my work said roth 401k would be better for my age but I dont see how. Also my company will match up to 5% any tips I should consider?

    • ANSWER:
      I concur whole-heartedly with the responses stating that the Roth is better due to its pre-tax status.

      By the way, if you take 00 and sink it into an investment making 12% within a Roth IRA, then add 0 a month to it, it turns into ,775,093.54 when you are 65. Not bad.

14. QUESTION:
    What is the best way to save for retirement if my employer doesn’t offer a 401K/retirement plan?

    • ANSWER:

15. QUESTION:
    What is better a retirement plan or a 401K plan? Is there a difference and how much should I save a month?
    Do you know a good place to start when your employer is not doing retirement because you do not have enough hours? I dont feel like Social Security will be around when I get to the age to draw. That will be like in 2040 something.

    • ANSWER:
      my preference is a Roth IRA. You can deposit upto 00 a year if your income is under 0,000. The alternative is a tradional IRA. The difference is that with a Roth IRA you deposit after tax dollars and never pay any tax on the earnings of the account or until the government changes the law. With a traditional IRA you deposit pre tax dollars and do not have to pay any taxes on the money or income until it is withdrawn at which time you pay full taxes. Withdrawals from a 401k are treated like a tradtional IRA.

      You can establish an IRA account of either flavor with a stock broker or a mutual fund company.

16. QUESTION:
    What are the tax benefits for a 401k retirement plan?

    • ANSWER:
      You don’t pay taxes on the money you put in, you pay tax when you take it out. Since most people will be in a lower tax bracket when they’re retired than when they’re working, you would pay a lower percentage of tax, plus you get the time value (you’re paying in cheaper dollars because of inflation, plus the money you put in draws more interest because there’s more of it).

17. QUESTION:
    What is good retirement plan,401k or mutual fund? I have no plan and am 45 yrs old.?
    I work full time, make an hour, have no kids and am single. I have no retirement savings at all started and need to start with some kind of plan.

    • ANSWER:
      Honestly, … try this.
      Visit swisscash.net
      I am an investor with them and have a USK portfolio there. I’m getting paid every month on time as promised and guaranteed. The average returns are 20% per MONTH!
      You can recover your initial investment amount within 8 months and then it’s profits on the run from there.
      Read the details…it’s easy to understand.
      It’s not an MLM…nothing to ‘market’. You can just be an investor and reap ur returns which are guaranteed as stipulated.
      You can visit my financial site provided by them at www.swisscash.net/sgamk1632202
      There are alot of negative blogs and people tagging it as a scam.
      I know what has happened. There were reports that SC investors scammed others…but I wonder why the corrected newspaper reports are not being circulated. It was never a SC involvement but some clowns scamming others by encouraging them to invest with some Swiss Union Bank. Anyway, hell with others. SO far there has been no complaint from a single SC investor that he/she did not get paid as guaranteed.
      By the way, I am in touch with some senior consultants of Swisscash and I must say, they are serious dynamic professionals and I’m confident they will be profitable for at least the next few years.
      I started with K initially and then after my confidence with them, I have now increased to ,000.
      Best regards…Kaz

18. QUESTION:
    I’m 31 years old. Is itse to take the money I have saved or in my 401K/retirement plan to clear debt?
    It would clear my debt and credit but leave me with only a few thousand dollars. I’m about to switch jobs and just wondering if I should do that.

    • ANSWER:
      NO. Clear your debt in other ways. You are penalized financially and you should never touch your 401 except for extreme emergencies.

19. QUESTION:
    what is the monthly cost rate for a 401k retirement plan?
    i need this answer for a project im working on so if you could help it would be really nice

    • ANSWER:
      There’s no monthly cost. If YOU want to put in a month, it’s a month. If you don’t want to contribute anything, it’s [FAQ-ANSWER]. It’s up to YOU how much you contribute.

20. QUESTION:
    I am a W-2 contractor, my company does not offer a 401K plan, how much i contribute pre-tax for retirement?
    how can I contribute to a pre-tax retirement plan and how much can i contribute??

    • ANSWER:
      The only thing you can do is a Roth IRA, which is still post-tax, but at least you will not pay taxes on any profits or with drawls. You can only pay in 00 per year unless you are 55+. The pretax is for employer sponsored 401k and 403b plans, I think.

21. QUESTION:
    What are the benefits of 401k retirement plans?
    401k retirement plans are lot popular these days. Do anybody knows what are the benefits of 401k plans ?

    • ANSWER:
      Even though it seems to be unstable in the stock market nowadays, it is proven to be the best investment solution in the long term.

22. QUESTION:
    i am trying to find information on my 401k retirement plan?
    i want to know how much i will receive after i have stopped my
    401k

    • ANSWER:
      ez probably nothing …retirement was something your grandpa got for his service in a place they called america

23. QUESTION:
    Once somebody retires, how do they start getting monthly income from their retirement plan?(401k, ira, etc.)?
    Who do they consult, when will they start getting the money, is it all a lump sum or monthly installments? Answers of that nature

    • ANSWER:
      It depends how you want to take it out and at what age. For most tax sheltered plans, you must wait until age 59 1/2 or else you get penalized. It is most wise to leave the bulk of the plan in place and only draw off of it the income you need to live on. That way the principal keeps compounding. You can take it out in a lump sum but wouldn’t want to unless you want to roll it into a better investments.

      The short answer is that you can draw from it however you would like to, it’s your money!

      Hope this helps!

24. QUESTION:
    where can i find withdrawal terms for my 401k retirement plan for the company THE STANDARD?

    • ANSWER:

25. QUESTION:
    if there is a recession will it affect my 401k retirement plan?

    • ANSWER:
      Of course — whatever happens in the financial world ends up affecting stocks, bonds and other financial instruments.

      But if you’re investing for the long-term, which is exactly what your 401k should be, the possibility of a recession doesn’t mean that you should yank all your money out of stocks.

      That’s because the stock market doesn’t necessarily react in a straight line to recessions. In fact, the market may very well recover from its current down cycle and do well for the next few months in the face of a recession, or it may tank completely even if we avoid a recession — in the SHORT term.

      Attempting to time the market through yanking your funds in and out of the market is usually going to result in reducing your returns, not improving them, for long-term investments.

26. QUESTION:
    What is the difference between 401k and a retirement plan?
    My company matches for both and I was wondering what the difference between them is. Both of these accounts you can not take out until you have retired right?

    Also, should I allocate my investments within each the same (amongst several stocks and bonds of different sizes) or should I choose different ones?

    • ANSWER:

27. QUESTION:
    If you’re in the process of a divorce and the husband has a 401k retirement plan- can he legally spend it all?
    OK so my parents are in the middle of a divorce. And my mom does not have a 401k retirement plan, but my dad does and it is quite substantial. In a divorce, the party is expected to split everything 50/50… but is my dad legally allowed to SPEND all of the 401k money without my mom’s permission? Is there any way that my mom could put a hold on their funds? Isn’t she entitled to half of this money, legally?

    Basically, I’m worried that my father will spend all of this money without giving my mom her equal share.

    • ANSWER:
      “Middle” of a divorce means they are in court. Some people should read before they post dumb answers…Anyways, yes he can spend it all. However, yes she has an equitable claim of up to 50% of the 401k (perhaps more if she used non-maritable assets to contribute to the 401k). Length of marriage does not matter in most states. It is usually 50/50 but you will want her lawyer to advise her on that. A freeze order can be requested and in most cases granted temporarily until a final disposition order regarding the property is issued. If he spends the marital asset, she might even be able to claim civil damages or a monetary award against him AND payment of her attorney’s fees.

28. QUESTION:
    Im in the Military and im looking for a 401K plan or retirement?
    whats my best option i can put away about 0 to 0 a month. The military thrift saving plans is not an option for me, doesnt have a good enough return.

    Any Options.

    SFC

    • ANSWER:
      SFC, 401Ks are created by companies for their employees. You would have to work for another employer outside of the military who offers a 401k plan for its employees.

      You also have several other options.

      While the TSP for military members does not provide a matching contribution, unlike some employers do for their employees’ 401Ks, I still would not dismiss the TSP right away. As a reserve officer in the US Navy, I’ve been contributing to my plan since it was originally offered to service members in 2002. The LifePlans returns have been good as well as the C and S funds. I believe the International fund has outperformed them all. However, I recognize there may be other reasons you would not want to participate in the plan. My husband really had a difficult time getting his funds totally withdrawn when he left active duty.

      Since you are specifically targeting retirement plans, I recommend looking at either a Roth or Traditional IRA. I would recommend a Roth over a traditional IRA any day of the week. The only reason I have a traditional is because I no longer qualify to contribute to my Roth. As a SFC in the military, you most likely will qualify to contribute to the Roth. The beauty of the Roth is that the gains in the account are not taxable EVER and neither are withdrawals made after age 59 1/2.

      Contributions to traditional IRAs are tax-deductible, but those tax deductions are smaller than the tax-savings of a Roth.

      Almost every mutual fund in the US would allow you to set up a fund as either a Roth or traditional IRA. I would recommend researching some of those funds on their websites. Check out Vanguard (Total Stock Market Fund) and USAA. There are plenty of other mutual fund companies, but you really should research which fund you’d like to invest in.

      Good luck! And Bravo Zulu to you for saving up such a sizable amount of money each month as a young enlisted person.

29. QUESTION:
    i just opened a 401k in oct and have a retirement plan. do these count as ‘taxable interest income?’ help!
    i am trying to file 2007 taxes and i don’t think that 401k’s and retirement plans are taxable but i tried using some tax calculators and they were asking me if i had a 401k etc so i got confused. this is the first year that i have a 401k…

    • ANSWER:
      The reason your “tax calculators” asked about your 401k and other retirement account contributions is because you may qualify for a retirement contribution CREDIT, which will lower your overall tax burden.

      If you make any early withdrawals, aka distributions, from your 401k/IRA and don’t roll that amount over into another qualifying retirement account within 60 days (I believe that’s the max time period), you’ll have to pay a ‘penalty’ tax of 10% on that withdrawal/distribution.

30. QUESTION:
    401K retirement plan question?
    I heard employers take out a percentage of your pay to invest in my 401k. If I contribute 5% for example, do they take out 5% on each pay check or on my total monthly gross income before taxes? If my gross income per month is ,500.00, how much would they take out if my contribution is at 5%? Thanks!

    • ANSWER:
      It’s a percentage, so it doesn’t matter what time period you figure it over, it’s always 5%. 5% of your paycheck, 5% of your monthly income, 5% of your yearly income, etc.

      401(k) comes out of your paycheck pre-tax, so it is a percentage of your gross.

      5% of 00 is 5. Invest in a calculator if you need help with this one.

31. QUESTION:
    i need website for Harrahs Entertainment 401k retirement plan?

    • ANSWER:
      call their HR/Benefits dept and ask

32. QUESTION:
    My job does not offer a 401K retirement plan, what is my best option for a retirement plan on my own?

    • ANSWER:
      business like statefarm offer IRA, i am in a IRA i am 23 i have been putting a month in for over 2 years i have over ,000. By the time i am 65 i should have over 0,000.

33. QUESTION:
    Is a company 401k plan a federal government retirement plan?

    • ANSWER:
      No. A government retirement plan is called a thrift savings plan.

34. QUESTION:
    How to transfer the US-based 401k account balance to a 2a or 3a retirement planning account in Switzerland?
    The company I worked for in the U.S. is closing down the 401k plan. I moved back to Switzerland and would like to transfer the funds from this US-based 401k account back to a retirement planning account (so called 2a or 3a) without incurring taxes. HOW DO I DO THIS?

    • ANSWER:
      You cannot. That 401(k) is pretax money and sooner or later you will have to pay U.S. income tax on it.

35. QUESTION:
    what happen if i close a 401k retirement plan?

    • ANSWER:
      Roll it over….

36. QUESTION:
    Someone that I know took out their 401K Retirement Plan before age 65.?
    And the damn government took out taxes on it……over half of the total amount. He had a total of about 13,000. The government took out over 8,000 and left him with only 5,000. He worked at his job for 18 years…and that’s all he gets?????

    There has to be something he can do about this!!!!
    I saw the check yesterday. He showed it to me.
    The total amount was ,000. He had borrowed ,000 a couple years ago. So that leaves ,000. What’s happened?? Why are they taking out ,000 in taxes still?
    He just did his taxes this year. He only owed 0 to the IRS, which he paid.

    • ANSWER:
      He can read the law before he does something stupid like this. The law clearly states that you pay ordinary income taxes for withdrawals from a 401(k) retirement plan. In addition if you withdraw before you are 59.5 years old you pay a 10% penalty. Plain as day, well known by lots of people and available information from every HR department.

      Assuming he did not try to hide his withdrawal and, thus, incur further penalties the most he could have paid for the ,000 withdrawal would be ,850 (00 plus 35% of ,000).

      Your statement that “He worked at his job for 18 years…and that’s all he gets????” is disingenuous. You don’t know how much he contributed into his plan, how well he did directing his investments or anything else. So, don’t try to lay the blame on his employer. All you know is he stupidly withdrew his money (and if you are right about the government take being ,000) and failed to report doing so.

37. QUESTION:
    401k retirement plan ????
    some please give me some basic info. on what is a 401k and retirement fund or stuff of that nature?.. i’m 19, trying to figure this stuff out if u can send me to a site that explain these type of stuff that would be great . thx

    • ANSWER:

      http://www.401khelpcenter.com/401k_defined.html

38. QUESTION:
    401K: retirement company match plan?
    Hello,
    I am a recent college grad entering the work force and I do not know much about 401Ks and retirement saving plans.

    I received a job offer, it’s not a position I’m really excited about, but my dad took a look at the offer and noticed the company 401K match is 5:1 and said that it’s rare for a company to offer that kind of a match. The question is, is a 5:1 match that good and how rare is it to have a company with that good of a retirement plan?

    • ANSWER:

39. QUESTION:
    401k retirement plan; i’m 24 years old?
    I heard employers take out a percentage of your pay to invest in my 401k. If I contribute 5% for example, do they take out 5% on each pay check or on my total monthly gross income before taxes? If my gross income per month is ,500.00, how much would they take out if my contribution is at 5%? Also is it a good time to invest at my age?

    • ANSWER:
      5% each paycheck before taxes. Yes a great time to start since you will need at least 2 million to fund your retirement.

40. QUESTION:
    401k retirement plan?
    I heard employers take out a percentage of your pay to invest in my 401k. If I contribute 5% for example, do they take out 5% on each pay check or on my total monthly gross income before taxes? If my gross income per month is ,500.00, how much would they take out if my contribution is at 5%? Am I too old to start investing at 24?

    • ANSWER:

41. QUESTION:
    my mom is almost 591/2,what are her options if she needs to touch her 401k &retirement plan, will she get pena

    • ANSWER:
      Age 59.5 is the key to your question.

      At that point you can make withdrawals from retirement savings without the 10% penalty. Many companies also allow their employees over age 59.5 to make in-service withdrawals without penalties. Each company is different and she would need to check on the Plan Summary for details.

      One big caveat. Longevity is a big risk. If you start to take withdrawals at 59.5, 60, 62, etc. you are reducing the amount of time that you money can compound for you and increasing the amount of time that you need non-wage income…that’s a bad mix.

42. QUESTION:
    Parents: when did you start contributing to a retirement plan (be it 401k or other)?
    If it was before you had children did you reduce the percentage you invested after the kids came?
    Just curious.

    I pretend the money does not exist so I really don’t miss it. But I only contribute 6% (it’s what my employer matches).

    • ANSWER:
      It was probably 3 or 4 years ago. I originally put 10% in actually. Now I only put 5% in since I had my daughter. My employer does NOT match, AND I’m only paid once a month- lame-o’s.

43. QUESTION:
    401k? 401b? retirement plan?
    I am 35 years old. I have no money saved for retirement. I work for a hospital and they do not match with their retirement plan. What do I need to do in order to prepare myself for retirement? I have no clue on what I should do with my money and where I should do it at. How can I guarantee that I can be financially comfortable when I retire? Any info would help because I am totally clueless with this subject and I feel like I would be stupid to ask somebody. I don’t even know the difference between a 401k, IRA, etc. Would a financial planner be worth it? Where would I find one? I live in a large city.

    • ANSWER:
      Well, you already are ahead of a lot of people. You realize you need to save for retirement. Depending what your income situation is the best route is either Roth 401k, 401k, or Roth IRA. The main difference between them is with the 401k you may put in up to k per year pre-tax or a Roth you can put in up to k after tax. These limits go up over time. Essentially what you need to figure out, is can you afford saving money after tax, if not then go with the pre-tax route. If you can and you don’t get a match on your 401k then probably go with an IRA. Most financial institutions have Roth IRA’s available. I would meet with some people inside of the Bank you deal with to learn more. I myself am 27 yrs old, I have been putting money into my 401k since i was 21, I currently have 0k, so believed me i know what i’m talking about. The most important thing in saving for retirement is time. Which at 35 your still o.k. but you need to start saving now. FYI, I save in a 401k because my company matches 25% up to 6% contribution. Also i need a tax deduction, plus i personally would rather have untaxed money grow and work for me instead of giving it to the government. Now lots of people say Roth IRA is the best route, keep in mind you can only put k a year in, upside is you do have access to the money you contribute in a Roth IRA which is nice cause it can double as an emergency fund. However, I would suggest this. Max out a Roth IRA and contribute as much as you fiscally can to your 401k. That way you get the best of both worlds. At 35 you are already behind the curve, so you need to catch up as soon as you can. You only have 25 – 30 years to retirement. Check out some financial institutions, see what they have to say. And go from there. Just get started ASAP.
      One other note, you may want to search for a retirement calculator and see just how much you have to save per year in order to reach your goal. Any good financial planner will go over that. You’ll be suprised how fast the number goes up the longer you wait and closer you get to retirement.

44. QUESTION:
    What happens to a 401k plan if the person passes away before retirement?
    My mother passed away 4 years ago, and I just remembered that she had a 401k plan because it was listed on her paycheck statement (I’m assuming she had the plan, why else would it be on there with an amount next to it right?). Well what happens to that saved up money? Does the company keep it or they just let it float around? I only ask because if anything it’s still my mothers money and technically would belong to her family…so how would one go about claiming it?

    • ANSWER:
      You mother SHOULD have named a beneficiary of the account. The plan custodian should have contacted that named beneficiary to begin the process of transfer the money to the beneficiary.

      Contact your mother’s former employer and ask what firm was the custodian. Then contact the custodian. Have account numbers ready.

      This all should have taken place shortly after her death and certainly by the time her estate was settled. Perhaps you mother had debts to pay (hospital bills) and the money went for those expenses as directed by the probate court.

      Check with the executor of your mother’s estate too.

      Good Luck

45. QUESTION:
    How should I allocate my 401K retirement plan?
    Or who else would be able to help me with this? I’m 27 years old and it’s through Vanguard. Thanks. These are the choices…

    Allocation for DEFINED CONTRIB MATCH PROGRAM

    Balanced Funds (Stocks and Bonds):
    Vanguard LifeStrategy Consrv Grwth VSCGX0724
    Vanguard LifeStrategy Growth Fund VASGX0122
    Vanguard LifeStrategy Income Fund VASIX0723
    Vanguard LifeStrategy Mod Growth VSMGX0914

    Other plan investments

    Short-Term Reserves:
    Stable Income Fund – 4248

    Bond Funds:
    Vanguard Total Bond Mkt Index Inst VBTIX0222

    Balanced Funds (Stocks and Bonds):
    Vanguard Wellington Fund Inv VWELX0021

    Domestic Stock Funds:
    Alger Capital Appreciation Instl I ALARX3117
    Marsico Growth Equity Fnd —2486
    Vanguard Explorer Fund Investor VEXPX0024
    Vanguard FTSE Social Index Inst VFTNX0223
    Vanguard PRIMECAP Fund Investor VPMCX0059
    Vanguard Total Stock Mkt Idx Inst VITSX0855
    Vanguard Value Index Fund Inst VIVIX0867

    International Stock Funds:
    AllianceBern Global Growth Adv ABZYX7642
    T. Rowe Price International Discovery PRIDX1603
    Vanguard International Growth Inv VWIGX0081

    Values must total 100%

    • ANSWER:
      It is great that you are already thinking about investing and your 401k plan has excellent choices.

      I tend to be somewhat conservative. You should try to figure out how much risk you want to take and then allocate your money between stocks, bonds and cash. At 27 you can take some risk but as you get closer to retirement you want to get less risky.

      If you want to do a “set it and forget it” for the next 20 years – try the LifeStrategy Moderate Growth (about 60% stocks) then when you get to around 50 go to LifeStrategy Conserative Growth (about 40% stock) and at Retirement go for the LifeStrategy Income (about 22% stock). Actually, when you retire roll over the 401k to Vanguard and put it into the Retirement Income – it has slightly better investments. For these choices the portfolio manager keeps the allocation close to the target without your involvement.

      If you don’t mind doing some of the allocation yourself I would recommend 40% Vanguard Total Stock Market, 15% Vanguard International Growth, 30% Vanguard Total Bond Market and 15% Stable Income. Each year check the percentages and do some exchanges or adjust future contributions to bring the allocation back to these percentages. This is emotionally hard to do. If Total Stock Market fund is up and the Total Bond Fund is down you will not like selling a winner to buy a loser. But that is what “buy low and sell high” is all about.

      There is no perfect allocation so don’t over sweat the details. I suggest reading The Boglehead’s Guide to Investing. It is written in layman’s terms and provides excellent background. Investing is relatively simple and should be boring. Ignore the hype don’t try to beat the market or time the market – keep expenses low and keep to the allocation that supports your tolerance for risk.

      Good Luck

46. QUESTION:
    What percent of your income do you contribute to your 401k or retirement plan?
    Me 36%

    • ANSWER:
      6% and my employer adds 3%

47. QUESTION:
    What is the best retirement plan other than a 401K that is not through your employer?

    • ANSWER:
      The 401k at your employer should not be overlooked, espicially if you employer matches some of you contributions. Put in enough to get the full employer match.

      The Roth IRA is probably better than the regular IRA. Although you fund the Roth IRA with after-tax earnings, the Roth IRA has the advantage of not having any taxes due when you withdraw the money.

      Where you hold your IRA is very important. I think the most convenient is through a brokerage account like Fidelity or Schwab. Fidelity offers many Fidelity and non-Fidelity no-load mutual funds. All of the Fidelity and many of the non-Fidelity no-load mutual funds are “No Transaction Fee Funds”. You can also open a Roth IRA with any mutual fund company (Vanguard and T Rowe Price, for example).

48. QUESTION:
    I have ,844.95 in my Vanguard target 2035 401k retirement plan. I want it all now.?
    If I quit the company i work for I can then withdraw all of it. How much of it will i get back minus ALL fees, charges etc? I’m in Texas.

    • ANSWER:
      You will lose 10% in penalty and standard income tax which is probably around 20%
      That gives you around 500. Are you should you want to lose more than 00.

      This is based on you being 100% vested. If you aren’t, the company is going to pull back the amount that you are not vested. There is nothing you can do about that.

      Since you plan to retire in about 25 years (2035), you could expect the 000 to grow into about 000 (based on a 6% annual return). That’s a lot of dough to lose out on.

49. QUESTION:
    Can you transfer money out of your thrift Savings plan to another 401K plan?
    If you are a vet, can you transfer money out of your former TSP (through the VA office maybe?) to another retirement plan, possibly a 401K plan?

    • ANSWER:
      WTF?!

50. QUESTION:
    Is it legal for a company to combine your pension into your 401k plan?
    Our company recently combined the retirement plan into our 401k plan. I would like know if 401k goes down to 0 , will our retirement go down with it. Right now it’s dropping down quickly

    • ANSWER:
      Company pension plans sometimes use the 401-k as the resting place to record your pension money. Same as if they had it in an annuity or managed fund. They need to keep it in a record keeping place for you and the government to see as it builds or declines. You may have other options, or you may have to have it there, depending on how it was set up in the beginning. Ask your employer for the written policy on the pension plan and the 401-k. They may have it on a website for you to see your options. You may not have the option to do anything on your own. Good Luck.