Tips for Keeping Your 401k in Good Shape in the New Year

December 8th, 2011

If you’re ready to improve your financial situation in the New Year, make sure you don’t neglect the value of your 401k. Your 401k account is a very valuable asset and can help to set you on the path to a comfortable retirement. Saving for retirement doesn’t have to be too much of a struggle when you get your finances in order and make sure you’re being consistent with your contributions. There are also several ways you can keep your 401k in good shape throughout the year. A little planning and budgeting is all it really takes to maintain a healthy retirement account

Here are some essential tips for keeping your 401k in great shape in the New Year:

  1. Take advantage of employer contributions. Make sure you’re making the most of your employment benefits by participating in a company-sponsored plan right away. The sooner you start contributing to your 401k, the more money you will have available through an employer match. Employers do have limits on how much they can contribute, but they will be able to offer a generous amount as part of your benefits package.
  2. Don’t touch those funds. While it may be tempting to withdraw from your retirement account when you’re faced with an emergency situation, you’ll miss out on some very significant tax benefits. Remember that all of that money isn’t taxed until you pull your money out, so your investment is much more valuable in this tax-free account than a regular savings account. Avoid tapping into this account at all costs so you can make the most of your investment come retirement time.
  3. Contribute more this year. If you haven’t been contributing the full amount possible towards your 401k, make this the year that you maximize your contributions. Find out what this year’s contribution limits are and plan to make generous contributions to your account throughout the year. Having the funds directly deposited from your paycheck will make it easier to save this money because you won’t have to make the extra deposit yourself. Just ask your employer to take the money right out of your paycheck so you are only left with take-home pay.

Keeping your 401k account in great shape may take some effort, but your hard work will pay off. Make the most of employee benefits and make sure to leave this account alone for as long as possible to get maximize the rewards.

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401k basics, retirement plans

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