5 Must-Know Details about Your 401(k) Plan

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If you’re confused by your 401(k) plan, you aren’t alone.

According to a J.P. Morgan 2021 Defined Contribution Plan Participant Survey, 401(k) investors are “overwhelmed and unsure about the various aspects of retirement planning.”

#1 What Is Your 401(k) Plan Vesting Schedule?
Vesting is nothing more than a fancy way of saying ownership.

Depending on your 401(k) plan’s vesting schedule, you may not own the money your employer contributed until you are fully vested.

There are 3 types of vesting schedules.

#1 Immediate - This means you own your employer contribution as soon as you receive it in your 401(k) account.

#2 Graded - This means you vest a certain percentage of your employer matching dollars in a set period of time, until you are 100% vested.

#3 Cliff - Some companies require you to stay employed for a specific amount of time before the money your employer contributed is yours.

Related Read: What Every Investor Needs to Know about 401(k) Vesting: [ Ссылка ]

#2 What Is Your Company Match?
A 401(k) company match is money your employer contributes to your account based on your contribution amount and is usually capped at a certain percentage of your income.

Some companies offer dollar-for-dollar matches. This means the employer matches $1 for every $1 you contribute, up to a certain amount.

#3 What Are Your Investment Options?
Many companies’ 401(k) plans use target date funds (i.e., 2030, 2040, or 2050 funds) as their default option, automatically enrolling employees in them.

They can do this thanks to the Pension Protection Act of 2016, which allows employers to direct plan participants’ assets into a target date fund and not be liable should the employee not select an investment.

Investors are grouped solely based on their expected retirement date. This means target date funds do not take into consideration an investor’s…

Location
Profession
Salary
Risk tolerance
Retirement goals and objectives

Check out this video to learn more on how to choose investments for your 401(k): [ Ссылка ]

#4 What Is the Cost of Your 401(k) Investment Options?
Your 401(k) comes with various fees that, when added up, may get pricey and have an impact on your 401(k) return over time.

#5 How Do I Change My 401(k) Investments?
Understanding how to change your 401(k) investments is important if you want to maximize your returns.

Adjusting your account allocations (or rebalancing) is the process of realigning the weightings of the assets (your investments) in the portfolio.

Understanding how to rebalance is critical because things change and you want your account to reflect these changes.

If you aren’t rebalancing, you may run the risk of unmanaged allocations experiencing much larger losses in down markets and miss the opportunity for growth during good markets.

Make sure to ask the following questions of your 401(k) plan provider:

Can I make changes to my investments online?
Do I have to go through the plan provider or fill out a form?
How often am I able to make changes?

Related Read: What Every Investor Needs to Know about Rebalancing a 401(k): [ Ссылка ]

Where to Get Professional 401(k) Account Management
401(k) Maneuver exists to help employees grow and protect their 401(k) accounts. We provide independent, personalized professional account management to help employees, just like you, grow and protect their 401(k) accounts.

Our done-for-you, virtual service allows you to keep your 401(k) right where it is while we review and rebalance your account based on your risk tolerance and current market conditions.

As a fiduciary, we are bound by law to put your interests first, and we do not receive commissions on the trade.

Watch this short video on how it works and how 401(k) Maneuver may help you increase your account performance.

If after reading this, you feel like your 401(k) should be working harder for you, and you have questions, book a complimentary 15-minute 401(k) Strategy Session with one of our advisors: [ Ссылка ]

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Check out our 401(k) calculator to see how much extra income you could have in retirement using professional help. [ Ссылка ]

Have questions or concerns about your 401(k) performance? Book a complimentary 15-minute 401(k) strategy session with one of our advisors: [ Ссылка ]

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