Let’s Talk… What Should I Do With My 401K Right Now?

First, come up with a plan. Make sure your 401K is maxed out to get maximum benefit, especially if your employer is matching contributions. You need to take into account that changes you request for payroll deductions may take a couple of pay cycles.

Second, consider limiting yourself to no more than 20% of your 401K in the stock of the company you work for. Having your job security, potentially your pension, and over 20% of your 401K assets all tied into the company you work for could be too risky.

Third, assess your risk tolerance and maintain proper balance. No one is the same. We are all different so our investments should not be allocated in the same way. Many times I see potential prospects that have too much risk in their portfolio compared to what they are comfortable with.

Fourth, take stock of what you own. I always stress the need for quality investments. Realize there is a lot of junk out there. The chances of a bad investment coming back after you’ve lost money are relatively low. You need to analyze whether to sell bad investments and move on.

Lastly, if you are a plan participant and are getting ready to leave your employer, get all the details before you leave. Ask: “Do I have a lump sum payout option?”, “What is the payment that I can receive?”, “When can I start getting payments and for how much?”.

Consider all options that may be available to you:

• Leave the money in your former employer’s plan, if permitted;
• Roll over the assets to your new employer’s plan, if one is available and rollovers are permitted;
• Roll over to an IRA; or
• Cash out the account value.

Contact us for a free 401K review today.