How to save your 401k?

31st Oct 2009 by Joseph Pousada

If you recently have changed employers or faced a termination and the plan you were with is sending you a distribution then you need to see your financial advisor about rolling your 401k to an IRA Rollover account. If you do not, the distribution from the 401k will be considered income for the year in which the distribution takes place and if you are under 59 ½ may be subject to IRS premature withdrawal penalties. The IRS has certain timelines that must be met for rolling over funds distributed directly to the plan participant (as opposed to being distributed directly to another qualified plan.) You would want to contact your financial advisor to have you set up with an IRA Rollover right away and to go over your investment options.

All too often, people forget to go over their 401k plans with their financial advisor. If you are simply dissatisfied with the investment performance and even if you are not it is important to obtain as much information as you can from your plan administrator (including prospectuses, fees and performance information) and have it reviewed with your financial advisor. If you are dissatisfied with the performance you can discuss what your options are and what strategies you can take to enhance the performance of your portfolio. If you are happy it is still good to review because you may discover your asset allocation is not what you expected or there are overlaps in your investment strategy which will affect the diversification of your nest egg. There are many other discoveries that can be made with a careful review with your financial advisor. Once you know what they are you can make a plan of action to move forward.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com