Assessing Your 401(k) Plan
At least annually, you should thoroughly review your 401(k) plan. Some items to consider include:
Have your goals or objectives changed? Most people use their 401(k) plan to fund retirement, although it can also be used for other things.Take time to reassess your goals and objectives, which can impact how much you contribute and how you invest those contributions. Calculate how much you’ll need at retirement as well as how much you should save annually to meet that goal.
Are you contributing as much as you can to the plan?Look for ways to increase your contribution rate. One strategy is to allocate any salary increases to your 401(k) plan immediately, before you get used to the money and find ways to spend it. At a minimum, make sure you are contributing enough to take full advantage of any matching contributions made by your employer. In 2019, the maximum contribution to a 401(k) plan is $19,000 plus an additional $6,000 catch-up contribution, if permitted by the plan, for individuals age 50 and older.
Are the assets in your 401(k) plan properly allocated? Some of the more common mistakes made when investing 401(k) assets include allocating too much to conservative investments, not diversifying among several investment vehicles, and investing too much in the employer’s stock. Saving for retirement typically encompasses a long time frame, so make investment choices that reflect that time period. For many, that means a significant portion of their assets should be invested in growth vehicles.
Do your investments need to be rebalanced?Use this review to ensure your allocation still makes sense. Also review the performance of individual investments, comparing the performance to appropriate benchmarks. You can’t just select your investments once and then ignore the plan. Review your allocation annually to make sure it is close to your desired allocation. If not, adjust your holdings to get your allocation back in line. Selling investments within your 401(k) plan does not generate tax liabilities, so you can make these changes without any tax ramifications.
Are you satisfied with the features of your 401(k) plan? If there are aspects of your plan you’re not happy with, such as too few investment choices or no employer matching, take this opportunity to let your employer know.
Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Avenue, Carpinteria CA. 93013, (800) 874-6910. Randall Wealth Management Group and PlanMember Securities Corporation are independently owned and operated. PSEC is not responsible or liable for ancillary products or services offered by Randall Wealth Management Group or this representative. CA Insurance License: #0727953.
This newsletter was prepared by Integrated Concepts Group, Inc. The opinions expressed in this newsletter are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to it accuracy or completeness.