Retirement
My New 401K Plan
By Jason Cunningham
Apr 10, 2007 - 3:38:53 AM

You have just opened your new 401K packet. You find inside the package a prospectus that list all of the funds choices, a handbook explaining your 401K benefits, and three or four pages of stapled papers that must be signed and returned.You should pay especial attention to:

1. Vesting Period - Learn how many years you must participate in the company's 401K to be fully vested. Otherwise, you might leave the company prior to receiving 100% of their 401K match (Many companies have 5 years or 7 years vesting).

2. Company Match - How much money is your company going to contribute to your 401K (You may see a $1 for $1 match on the first 2%, and $.50 on the next 1%).

3. Beneficiary - Please name a beneficiary and a contingent one. Your 401K could be subject to probate when no beneficiary is named.

4. Salary Reduction - Decide what percentage of your salary will go to fund your 401K. You might also need to select whether contributions are pre-tax or after-tax.

5. Mutual Funds or Company Stock - Learn all of your fund options. Do an assessment of your own risk tolerance. Your buddy next to you at work does not probably have the same financial needs as you do. And what did well in the market last year is not a good formula for picking funds in your 401K.

6. Handbook - Read it carefully and keep it in an available place.

7. Financial Professional - Your employer should have an investment specialist accessible to review your 401K with you.