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6 Things to Know About Your 401k Plan by Age 55

Things You Must Know to Determine What to Do With Your 401k Plan


What do you know about your 401k plan and how to use it most effectively? What? Not much? That’s ok. It’s not too late. Work your way though the six items below and you’re bound to learn what to do with your 401k money.

1. How Much Should I Contribute to my 401k Plan?

It is easy to assume that you should contribute to your 401k plan, and that you should contribute as much as possible, but this is not always true. There are times where it may make sense not to contribute. You have to consider your other savings plans, the availability of a company match, and taxes. The article How Much Should I Contribute to my 401k Plan explains the factors that matter and how to use them.

2. How to Invest Your 401k Money

Some people mistakenly assume that if you are trying to make up for lost time that perhaps you should take on more risk and invest aggressively. Not a good idea. What is a good way to invest 401k money? Use one of these foolproof ideas in the article 3 FoolProof Ways to Invest Your 401k Money.

3. 401k Vesting and What it Means For You

If you are considering a change of employment, before you decide when to make a change, read up on 401k vesting. Vesting refers to how much of the 401k money that your employer contributed on your behalf gets to go with you. Sometimes waiting a few months to make a change could mean you get more. Learn what to look for in 401k Vesting and What It Means For You.

4. What to Know Before You Cash Out Your 401k

People make big money mistakes when they cash out their 401k plan. You may think it is a good idea to cash out an old 401k plan to pay off debt, but it may be one of the worst things you can do. Why? Did you know 401k money is creditor protected? Learn more in What to Know Before You Cash Out Your 401k.

5. What Happen to Your Outstanding 401k Loans?

If you leave an employer and have an outstanding 401k plan loan, did you know the entire loan may be treated as a distribution to you, and reported as taxable income? This is one of the seven things covered in 7 Things to Know About 401k Loans.

6. How to Take Money Out of a 401k Plan

It is your money, and you need to know how to use it when the time comes. Different rules apply depending on your age and your employment status. For example, if you leave your money in the plan, but leave your employer between age 55 and 59 ½, you may be able to access 401k money without paying the 10% early withdrawal penalty tax. If you roll it to an IRA you would lose this option. Don’t take money out without reading up on How to Take Money Out of a 401k Plan.

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