Common 401(k) FAQs

Today’s Prep:

What are some of the most frequently asked questions when it comes to a 401(k)? There can be a lot to a 401(k) so we’ll help you plan correctly.

(Click the featured times below to jump forward in the episode)

Equipping Points:

If you get a 401(k) through work, you might have questions or certain scenarios that come up. Eric shares his thoughts and some guidance on what you should keep in mind when it comes to these retirement accounts.

When your company has a 401(k) program, they may offer low fee advice. Is this something you should take? Eric says when you’re in the accumulation phase, you want to lower your fees as much as possible. But know what that fee covers. Will they be creating an entire plan or just helping you choose the funds? Inside your 401(k) there are usually target-date funds. You might find that the target date funds are similar to what the 401(k) program advice provides for a fee.

How much should you really put in that 401(k) account? Should you put as much in as you can or only up to the match? This used to be a question more when people were deciding between a Roth IRA or 401(k). Now, so many 401(k)s offer a Roth 401(k) option. Saving in a tax-free account is always better. The nice thing about a 401(k) is that it’s a payroll deduction, so you are systematically investing without having to do anything. You can put a lot more into a 401(k) than a Roth IRA, but if you can do both, do both.

Are target-date funds a good idea to use? Eric says this is a good way to put your savings on autopilot. But, understand that your contribution should be a different risk tolerance than your balance. Also, find out what happens once you reach that target date.

Finally, is a 401(k) loan a good idea or a bad idea? You are taking money out of the market, so if you can find a better way to do it then do that instead. But if something unexpected arises, it is an option.

Listen to the entire episode or skip ahead using the timestamps below.

[1:11] Company plan offers advice for a low fee, should I take it?

[4:04]Do I put as much as I can in or just up to the match?

[6:03] Should I use target-date funds?

[7:16] Is a 401(k) loan a bad idea?

Today’s Takeaway:

As you’re accumulating, depending on what stage your life’s in, your contribution should be a different risk tolerance than your balance.

-Eric Peterson

More From Eric:

The host: Eric Peterson - Contact - Call: (515) 226-1500

Subscribe To The Podcast:

Apple Podcasts  -  Google Podcasts  -  Spotify  -  Stitcher  -  iHeartRadio  -  TuneIn

Check out some other recent episodes

Mailbag: How Much is Too Much to Spend on a Forever Home?

August 4, 2022

Retirement decisions involve a lot more than just the money, but also the emotional and lifestyle decisions, too. Eric answers three questions from the mailbag from listeners making retirement decisions.

Read More

Financial Jeopardy

July 28, 2022

We play the game of Jeopardy as Eric answers financial questions on today’s show. Do you know all the answers?

Read More

401(k) Weaknesses

July 21, 2022

If you have a 401(k), what are some of the downsides? Eric talks through what a 401(k) is best for and when it is better to invest elsewhere.

Read More

Retirement Planning: It’s Not As Easy As It Looks

July 14, 2022

What should you be considering when trying to DIY your retirement plan? Eric talks through why many later decide working with a financial advisor is best.

Read More

Financial Security in Retirement

July 7, 2022

What does it look like to achieve financial security? Let’s talk through a few financial goals people have when they meet with a financial advisor.

Read More

Financial Planning for Business Owners

June 30, 2022

When you’re a business owner, you put your heart and soul into your business. There’s a lot that goes into starting and running a successful business. When it’s time to retire though, how can you make sure your transition goes well?

Read More

Economic News and Sensational Headlines

June 23, 2022

How much should you pay attention to some of these recent financial news headlines? Eric shares what he thinks and what matters when it comes to your financial situation.

Read More

Conventional Wisdom

June 16, 2022

Should you follow conventional wisdom when it comes to your financial decisions? Eric shares when the conventional wisdom might not be best.

Read More

Retirement Vacation Planning

June 9, 2022

Let’s plan the vacation of your dreams: retirement. More than simply a week away, you want to spend the right amount of time and energy thinking about this major season in life.

Read More

Financial Things We Can All Relate To

June 2, 2022

What are we all facing and wondering about in our financial futures? Eric talks through a few topics you might have had on your mind lately.

Read More

Leave a Comment