How to Tell if You Have a Good 401(k) Plan

A generous 401(k) match and low-cost investment options can boost your chances of a secure retirement

August 23, 2010 RSS Feed Print

Comment (7)
Tweet

Plan costs. Beginning on July 16, 2011, 401(k) service providers will be required to disclose the fees and charges deducted from 401(k)'s. Until then, ask for a copy of each fund's prospectus and pay particular attention to the funds' expense ratios. Look for funds with an expense ratio below 1 percent, especially when it comes to index funds, ETFs, and passively managed funds, Solin says. "If all the expenses for your 401(k) are more than 1.5 percent, that is starting to look like it is really going to eat into your returns."

[See 10 Ways to Ruin Your Retirement.]

Responses to employee needs. Employers use 401(k)'s to attract and retain productive workers. If you're not happy with your 401(k) plan, consider suggesting changes to your human resources department. "Ask your employer to consider making enhancements to the plan and suggest one or two—or no more than three—things," says Hutcheson. "Show the employer how the change would impact how much you have at retirement. I have found time and time again that very seldom does an employer say no to that."

Tags:: retirement

Reader Comments Read all comments (7)

Add Your Thoughts Comment Name State Email

Please enter the two words below into the text field underneath the image.

Your comment will be posted immediately, unless it is spam or contains profanity. For more information, please see our Comments FAQ.

This article quotes Matthew D. Hutcheson as a retirement plan expert of some sort. That is misleading. Mattew D. Hutcheson a known charlatan who is currently being investigated by the Department of Labor:
http://www.canadianbusiness.com/article/50434--workers-ask-idaho-fiduciary-where-is-their-money

GentleGethsemane of NY 6:35PM October 19, 2011

Actually, if you work for a large company, chances are that BrightScope has your plan in their database and can compare the quality of your plan to your company's peers. Check out www.brightscope.com, very cool site.
mike
www.protect-my-401k.com

Mike of TX 11:53PM November 24, 2010

Actually the gentleman "Bill" is correct on some of his points but I would like to point out two things. First many 401k plans now allow participants to have a ROTH option inside their 401k with the larger funding limits of a 401k. If your 401k does not currently offer this option, ask your employer to add it. While it is true that you cannot take the money out tax free until 59 1/2, it will be tax free. On the ROTH IRA, actually you can take your contributions backout at any time regardless of age. You just cannot take any gains on your contributions out until two rules are met. You have to be at least 59 1/2 AND the ROTH IRA account has to have existed for at least five years. Also, if you have a ROTH 401k balance, leave your employer and have a ROTH you can roll your ROTH 4012k balance into your ROTH IRA and get access to all the money right away IF you have the met affore mentioned 2 rules. So I tell my clients to just start a small ROTH IRA tat least to "start the clock" on the five year rule so when you are 59 1/2 so you are good to go on tax free withdrawals.

AV of ND 12:47AM September 03, 2010