Employee Benefit Plans: The 411

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

Consider Giving Your 401(k) Plan a Mid-year Check

As we’re now into the second half of 2010, I thought I’d share some advice I read recently in Sunday newspaper.  Charles Schwab is encouraging individuals to perform a mid-year review of their 401(k) investments through the following simple processes:

• Rebalance – Rebalancing means adjusting the allocations to the funds in your account back to their original targets.  The difference in performance between funds in your 401(k) account over time can cause your asset allocation to look very different from your original plan.
• Max out your company match – Are you contributing enough to take full advantage of the matching benefit your employer may be offering?  Consider increasing your contribution to do so if you haven’t already.
• Put your raise to work – As the economy has picked up slightly, some employees have received raises over the past year.  If you were one of those employees, did you increase your 401(k) deferral percentage, too?  Salary increases are a great opportunity to boost 401(k) savings, because it gives you the opportunity to take home some of the additional income today while also putting additional savings away for your retirement years.
• Consider your mix of investments – Have new investment options become available?  Are you comfortable with the current level of risk in your investment mix?  This should be evaluated on an ongoing basis.
• Take a look at your current beneficiaries – Have you had any recent changes in your family situation over the past six months?  If you’ve recently married, divorced or had a child, you’ll want to make sure you’ve updated this.

Spending a few moments evaluating the above recommendations is good way to ensure your 401(k) plan is set up to meet your long-term retirement savings plan and goals.

Jessica Puckett, CPA, CFE