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Questions to Ask Before Enrolling in a 401(k): Managing your 401(k) Plan

managing your 401(k) plan

Signing up and managing your 401(k) plan is easy, and a great way to start investing in your future. Understanding the basics of a retirement plan will give you the advantage of knowing how to maximize it.  

We discussed some of those basics in a previous blog post. Below are 6 additional questions to ask your employer to best manage your 401(k) plan.

What are my investment options?

A wide variety of 401(k) investments are available, and the choices you have depend on your employer and the provider that manages your account.

You may be able to choose from multiple fund options, some of which are targeted to your planned retirement year. Additionally, you may be able to select your investments in stocks, mutual funds, bonds, and other investment categories. Be mindful of the investment options available to you; some may come at additional costs.

What is the cost of my investment options?

Keeping your investment costs low is a smart way to maximize your returns. Many investments charge investors an expense ratio to cover the fund’s operating costs. And these fees can get pricey. You can ask your employer or plan provider for each option’s expense ratio to know how much is deducted from your return for costs.

How often can I change my investments to match my current needs?

Over time, your investment goals will change, and so will the market. Knowing how to adjust your account to meet your needs is crucial.

How is my account portfolio kept in balance?

Re-balancing your account allocations could potentially allow you to earn more and keep more of your hard-earned retirement savings. Why? Because unmanaged allocations are more likely to suffer significant losses in down markets and lose out on opportunities for growth in good markets. It’s beneficial to find out how often your account is re-balanced.

Is there a catch-up provision for older workers to make larger contributions?

With catch-up contributions, individuals over 50 can contribute more to their retirement accounts; the IRS allows for up to an additional $6,500 (for 2022). 

The goal is to make up for the years in which one might not have saved enough money when they were younger. Making catch-up payments is a good idea when you have the extra cash – the amount you can contribute depends on your retirement account type.

Who is the 401(k) provider?

401(k) providers are also known as Plan Administrators. You will likely get statements from them and have to log in to their website to check your balance. In addition, you can contact them when/if you have any questions about your plan.

Have more questions about managing your 401(k) plan? Feel free to live chat with us on our website by clicking the chat icon on the bottom right side of the screen. You can also contact us here, and we’ll be happy to answer any additional questions you may have!