Managing Your 401(K)

When it comes to managing your 401(k), you have some choices to make. Unfortunately, many people do not put much thought into the future, and only focus on the present. Think ahead. When you are still working, take these steps to ensure financial stability after you retire from your career.

• Make sure to get the company match. Employers usually state that they will match an employee's contribution up to a certain percentage. The standard match is about 50 cents for every dollar up to 6 percent of your salary. Contribute enough to get the full match, or else you would be giving up free money.
• Refrain from tapping into your 401(k) before retirement. During your career, this needs to be the last resort when all else fails. You have five years to repay the money back. After that period, the IRS will impose a heavy tax and penalty.
• Roll over your 401(k). If you are changing jobs, roll over your 401(k) investments to the new provider. If you do not do that and if you are younger than 59 ½ years of age, you will get cashed out of your 401(k) because your holdings will get taxed and get hit with a 10% penalty. If your new employer does not offer a retirement plan, think about rolling your account into an IRA (Individual Retirement Account).

Be mindful of these smart career tips and you will reap the benefits later.