Category - 401k Center

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Read This Before You Roll Over Your 401k
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Dealing With High Fees in Your 401k
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Are 401k Loans Double Taxed?
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To Roll or Not to Roll Your 401k
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Don’t leave your old 401(k) on autopilot when you change jobs

Read This Before You Roll Over Your 401k

As discussed in a previous post, it’s usually a good idea to roll over your 401k when you leave a job. However, there are exceptions.

One good reason to pause before you roll over your 401k is to check if you might benefit from a little known tax break that goes by the rather cryptic term “NUA”.   NUA stands for Net Unrealized Appreciation, which probably doesn’t help clarify things much either.

Essentially, NUA is a strategy by which people who hold company stock in their 401k plans can end up paying less income tax when making a withdrawal from …

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Dealing With High Fees in Your 401k

About 50 million people own 401(k)-type retirement plans, and the percentage of workers with defined-benefit (pension) plans has been dwindling for years. One problem with 401(k) plans is that many plans don’t disclose their fees openly. That would change if Congress moves forward with a bill currently awaiting action in the House of Representatives.

Even if an investor knows how to invest for retirement, the unavailability of a good 401(k) plan can still thwart good retirement planning intentions. From time to time, personal finance magazines publish articles on how to tell whether your company has a good plan. Usually the …

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Are 401k Loans Double Taxed?

It has long been an urban myth that when you take out a loan from your 401(k) that you’re being double-taxed on the amount of your loan… but this isn’t so. This is a very pervasive myth – lots of folks will agree with it out of hand, but it’s not correct, when you work out the details. I’ll start by trying to explain why people believe that they’re being double taxed.

Double-Tax Scenario

You take out a loan from your 401(k) for $10,000. You make arrangements to pay this back in 10 monthly payments of $1,010, with the extra …

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To Roll or Not to Roll Your 401k

I thought I’d tackle the granddaddy of all, the most frequently asked post-pink slip question: whether or not to roll over your 401k.

Keeping Track Becomes Difficult

My answer is usually “Probably yes, probably to an IRA, but don’t feel like you have to be in big hurry to make it happen.” The person who approached me with this question actually had old 401k’s from not 1, not 2, but 3 ex-employers. And that illustrates one of several reasons I usually say “Probably.” Frankly, this is just a lot to keep track of, plus a lot of extra paperwork, …

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Don’t leave your old 401(k) on autopilot when you change jobs

A recent analysis by Charles Schwab found that 43% of the 401(k) assets held by workers who left their jobs in the first quarter of 2008 still remains in the old plans. Leaving your assets on autopilot in your old employer’s plan may not be the smart thing to do.

Assets left in an old employer’s 401(k) plan are at risk of becoming “out of sight, out of mind”. If you neglect those assets, your overall asset allocation could become out of balance.

Get educated on your options, which typically include a rollover to an IRA, move the assets into …

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