Advice On Managing Your 401(K) Retirement Plan

The employer retirement plan (commonly known as a 401k/403b) is an essential savings and investment vehicle available to many individuals today. These plans provide significant benefits to employees, such as tax deferral on employee contributions, employer matching contributions, Roth contribution and greater annual deferral limits than an Individual Retirement Account (IRA).

However, a 401(k)’s features, investment choices and service providers are determined by the employer and offer employees little flexibility. Investors must choose among the investment vehicles offered and work within established rules and limits within their respective plan(s). Choosing the right investments within your plan can be difficult as plan data is not always readily available, and many HR departments often do not understand their own plans well enough to provide guidance to plan participants regarding their investment decisions.

Nevertheless, incorporating a 401(k) plan into your overall financial plan is extremely important and good advice is essential. Often times, investors that have a financial advisor managing other investments neglect or fail to receive specific advice on their employer retirement plan(s). This can be disastrous to your financial plan, especially if a majority of your retirement assets are comprised of your 401(k).

Prudent advice is particularly important as your retirement date edges closer – when it’s very important to hold on to what you’ve saved over many years. As William Simon, a managing director at investment firm Brinker Capital says in a Wall Street Journal article, retirement saving “is kind of like flying – the most dangerous parts are the takeoff and landing.”

Veronica Dagher, a writer for the Wall Street Journal, described the need for sound advice brilliantly when she stated, “How you manage your 401(k) plan may be the difference between a happy retirement and one where you’re always worried about money. But too often, many Americans aren’t making the most of this important retirement asset.” This speaks directly to the importance of working with a qualified financial advisor to ensure you are making the most out of your employer retirement plan(s).

You can read the full Wall Street Journal article by Veronica Dagher here.

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Callahan Financial Planning is an independent fiduciary financial advisory firm, providing planning on a fee-only basis, without sales commissions, with offices in San Rafael, San Francisco, and Mill Valley in Northern California, in Omaha and Lincoln in Nebraska, and in the Denver metro area in Centennial Colorado.