Tag Archives: 401k

Do you have a 401k from a prior employer?

A 401k plan – especially if you were with a company that had matching grants – can represent a substantial portion of your retirement savings. Preserving this asset is fairly simple but there are several ways for an employee to do so.

In a similar vein, employers should consider the ways they can help a new employee make the 401k rollover transition as easy as possible. Here is a quick rundown on the most important things to know, but still you should always consult an expert before making any decision concerning your 401k.

Advice for employees – As an employee with a 401k from a previous employer, you have two viable options – move the account to your new employer’s plan or establish a self-directed one. If you are an inexperienced investor or simply do not have the time to manage your 401k assets, by all means, take advantage of the rollover option. On the other hand, if you are a seasoned investor and do not like the fund choices offered by your new employer, opt for self-directing your monies.

Advice for employers – A matching 401k plan – behind a good medical plan – is one of the best benefits you can offer a potential employee. Offering one not only helps to attract the best candidates but also serves to retain them over the course of their employment. Obviously, a good transition process will aid in the transfer of a previous plan. Consult with a professional benefits firm to establish the most employee-attractive but still cost-effective 401k plan for your company.

A final word of advice – Always proceed with caution when making this decision as it will have a significant effect on your financial future. Some factors to consider include your age, how long you have until retirement, your risk tolerance and the amount of your assets. In fact, it never hurts to approach an expert to gain some context for your ultimate decision.

If indeed you are looking for further information on the benefits of 401Ks as either an employer or employee, please contact the experts at Lewis & Palmer Benefits. We can be found online at LPBenefits.com or reached directly at 954-308-7204.

What retirement plan options are best for you?

There are over a half-dozen common types of retirement plan options available – not to mention the more esoteric ones. Here is a quick primer on the most common ones and which will be best for your particular situation:

IRA plans – Individual retirement plans (IRAs) are the easiest retirement plan for a company to establish, as the employee is the only one contributing. In essence, it is a tax-deferral strategy. Your money grows tax-free today but you will have to pay tax when you finally distribute the proceeds.

401(k) plans – Easily the most popular type of retirement plan around today, a 401(k) retirement plan allows employees to make pre-tax contributions to their retirement account that are usually matched to some degree by the employer. The retirement account also grows tax-free until distribution of the assets at retirement.

4003(b) plans – Similar to a 401 (k) this type of plan is only suitable for certain eligible employees of tax-exempt organizations, public schools, and certain religious organizations. Again, the employee can contribute a specific percentage of their salary to the plan and have it matched by the employer.

Profit sharing plans – Profit sharing plans are beneficial to both the employee and the employer as benefits accrue depending on how well the company performs during the previous year. In addition, employers are free to adjust the terms while employees can take the fruits of their labors with them if they decide to leave the company.

SIMPLE plans – Designed for small businesses – a company must have 100 employees of less – a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) is a comparatively easy way for small businesses to set up an affordable retirement plan.

SEP plans – Simplified employee plans (SEP) are another easy – read that, paperwork-free – way to establish retirement accounts for employees. In short, employers make contributions on a tax-favored basis to individual retirement accounts (IRAs) that are owned by the employees

Without a doubt, retirement plan options can be quite confusing to the uninitiated or inexperienced. For more detailed information on them, please contact the experts at Lewis & Palmer Benefits. We can be found online at LPBenefits.com or reached directly at 954-308-7204.