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401k Account Tips
Economic hardship is a reality for many Americans at some point during their lives. People begin investing towards their 401k plans in order to prepare for their economic futures. Unfortunately, not many are educated on the topic of 401k accounts. Here are five tips to help those investing for their retirement.
401k Account Tip Number 1: Companies That Contribute
Companies receive tax breaks for contributing to employees plans. Experts encourage employees to look for companies that can donate funds towards individual 401k accounts.
401k Account Tip Number 2: Escalate Contributions with Pay Raises
In some cases, companies automatically raise an employees contributions at annual intervals. Unless the funds are immediately needed, employees are encouraged to continue to raise their contributions toward their 401k plan.
401k Account Tip Number 3: Forecast the Future
Each person is different, so each employee must consider making a decision that best suits their lifestyle. Some may opt to have more money now from their salary rather than placing it in their 401k plan. The issue is subjective, and each employee should be encouraged to make that decision for themselves.
401k Account Tip Number 4: Maintain Investment Control
It is important for employees to be aware of what is happening with their 401k plan. Sometimes the low rate of return on default options gives them a false sense of security; some are shocked when they realize the default options are not leaving them well prepared for their retirement. In addition, some default options are affixed to fees that can eat away at accumulated assets. Employees should be encouraged to remain active in analyzing their investment options and the finer points of their plan.
401k Account Tip Number 5: Do Not Borrow