Getting the Most Out of Your 401(k)

The 401(k) market has undergone major changes within the past few years.  New investment options have been added, the rules have changed for contributions, and Roth contributions have become another option for your plan.  Yet not everyone is reaping the full benefits of their company’s 401(k) plan.  Below are three rules that will help maximize your current benefits and your long-term retirement plans.

1. Get Your Match. Take advantage of your company’s matching plan.  Making excuses such as, “It’s only 2 percent,” or, “I don’t like the vesting schedule,” can cost you thousands of dollars in the long run. 
2. Rebalance Annually. Because the stock markets fluctuate like sea currents, it is important to make adjustments to your portfolio so that you can keep your focus on the long-term objectives and make decisions rationally. 
3. Use the Roth 401(k). Using a Roth gives you the option to put your money into the regular (tax-deductible) account or the Roth (after-tax) account.  The same 401(k) contribution rules apply, in that you can put $17,500 into the plan and there are no income limitations for eligibility. 

See Kelly Campbell, 3 Ways to Maximize Your 401(k), U.S. News & World Report, Sept. 16, 2014. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.