Part 1: Control Your 401(k) Destiny

  by Tyler Curtis

“An investment in knowledge pays the best interest.”

-Benjamin Franklin

Have you ever asked yourself who is in control of your 401(k) savings plan(s)?  Like many plan participants, you may think you’re in control. But the truth of the matter is that while you get to choose how to invest your retirement savings in an employer-sponsored plan, that’s about the extent of your control.

Our goal throughout this series is to shed light on the potential challenges you will likely find in any 401(k), as well as provide solutions to help mitigate these challenges.

Please understand that most people simply do not realize that each 401(k) has its own set of rules that controls your access to your money. Each plan also has rules that apply to your beneficiaries that can be very detrimental. 

Some plans are more participant-friendly while others are more beneficiary-friendly. The point is that in addition to IRS rules and regulations, your employer has their own unique set of rules that you must adhere to as long as your money remains in that plan.

If you are not retiring for the next 15, 20, 25 years, having access to your retirement savings may not be at the top of your list right now. But regardless of when you plan to retire, unless you have a crystal ball and know for absolute certain that you will live for the next 30 years or so, then I suggest paying close to attention.

If you are retired, nearing retirement, going to use your 401(k) plan(s) to provide income to supplement your retirement lifestyle, or are needing a plan for retirement, you owe it to yourself to embrace this series on 401(k)nowledge.

There are many facts on employer-sponsored plans that you may or may not be aware of: 
401(k) Facts
    • In most cases you do not have access to your money on your own terms
    • You have mandatory 20% minimum federal tax withholding on ANY taxable distribution from your 401(k) plan
    • Most plans have only 10-15 investment choices
    • Most plans limit you to investing in only mutual funds
    • When you separate you’re no longer contributing to the plan, you’re no longer getting matching contributions
    • Most 401(k) plans no longer allow you to borrow from your plan once you separate
    • Some plans may force you out of the plan once you attain a certain age, or face being cashed out and taxed
    • Most plans have some form of mandatory payout for beneficiaries in 401(k) plans and they could be cashed out if not careful!
To get the most out of this series, we recommend that you take the following steps:
    1. Make a list of all of your 401(k) plans.
    2. List the name of the employer that sponsored the plan.
    3. List the record-keeper for each 401(k) plan (Ex: Fidelity, Vanguard, T. Rowe Price).
What’s Next?

I sincerely hope you will find this educational tool beneficial and eye-opening.  Our next post on this topic will be sent out on July 15th. It will focus on accessing your money when/if you need it and understanding the available investment options in your plan(s).

 I also encourage you to click here to sign up for our free webinar on all of these important topics that will be on July 29th from noon to 1:00 CST. The webinar will recap the information we’ve covered so far, provide additional specific, detailed facts, and allow you to ask questions.

Please send this link to friends and family members interested in learning the little know facts of 401(k) plans.  After all, 401(k)nowledge is power.

If you have questions feel free to email me or call me directly at 972-746-4291.  I will be happy to answer any questions you might have.

Get this and similar content delivered directly to your inbox!  Sign-Up Now for our educational newsletter!

Join Our Newsletter!
Enter your name & email to have our great content delivered directly to your inbox.  
Your information will never be shared