Cover image for Smart guide to maximizing your 401(k) plan
Smart guide to maximizing your 401(k) plan
Wagner, Barbara, 1961-
Personal Author:
Publication Information:
New York : Cader Books : John Wiley, [1999]

Physical Description:
xvii, 220 pages : illustrations ; 24 cm.
General Note:
Includes index.
Format :


Call Number
Material Type
Home Location
Item Holds
HD7105.45.U6 H48 1999 Adult Non-Fiction Central Closed Stacks

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An all-you-need-to-know introduction to the employer-sponsoredretirement plan that has revolutionized the way we save
* Smart Ways to save with automatic payroll deductions and pretaxcontributions that let you earn more money and pay less taxes NOWand when you retire
* Smart Advice on how much to contribute and what you need to knowabout your investment options, including advice on stocks, mutualfunds, and bonds
* Smart Insights into retirement alternatives with the traditionalIRA and the new Roth IRA
* Smart Tips on borrowing and withdrawing money from your 401(k)and IRA to buy a home or pay for college
* Quick reading and easy referencing with a comprehensive index andloads of sidebars and tables

Smart Guides take readers seriously. They satisfy even the mostcurious person's desire to know the essentials about any of a widerange of topics--from vitamins to mutual funds to stress relief.It's all about good reading and expert information. The choice isyours.

Author Notes

Barbara Hetzer writes on personal finance, small business, and other work issues.

Table of Contents

Introductionp. xv
1. The 401(k): What Is It and How Does It Work?p. 1
What Exactly Is a 401 (k)?p. 2
Sister Plansp. 3
An Important Tax Changep. 4
Why Contribute to Your 401 (k)?p. 4
The Need for Your Own Retirement Savingsp. 6
How a 401 (k) Plan Worksp. 7
But First ... Eligibility Requirementsp. 9
Making Pre-Tax Contributionsp. 10
Automatic Payroll Deductions The Painless Way to Savep. 11
The Pre-Tax Savings Advantagep. 12
Making After-Tax Contributionsp. 13
Pre-Tax Contributions versus After-Tax Contributionsp. 14
Pre-Tax Contributions...p. 15
After-Tax Contributions...p. 15
The Tax-Deferred Investment
Earnings Advantagep. 16
More than a Mutual Fundp. 18
Still More Limitsp. 18
The Employer Matchp. 19
Are You Vested?p. 21
What You Lose If You Leave Before Vestingp. 22
Your Employer's Profit-Sharing Contributionp. 23
Not Your Typical Profit-Sharing Planp. 24
Those Contributions Really Add Upp. 25
2. Understanding the Fine Printp. 27
Key Documentsp. 28
The Summary Plan Descriptionp. 29
Prospectus and/or Fact Sheetp. 31
Individual Account Statementp. 31
Key Players in Your 401 (k) Planp. 31
Plan Sponsorp. 32
Plan Trusteep. 32
Plan Administratorp. 33
Record Keeperp. 33
Investment Managerp. 33
Need Help? Your Employer Can Explainp. 34
401 (k) Feesp. 35
Plan Administration Feesp. 35
Investment Feesp. 36
Sales Chargesp. 36
Management Feesp. 37
How Does Your Company's Plan Rate?p. 37
Why Companies Offer 401 (k)sp. 40
Is Your Money Safe?p. 41
Held in Trustp. 42
No Federal Guaranteesp. 43
404(c) Regulationsp. 43
A Few Other Rules to Notep. 44
Some Red Flagsp. 45
Special Circumstancesp. 45
If You Declare Personal Bankruptcyp. 46
If You Get Divorcedp. 46
If You Diep. 46
3. The IRA: What Is It and How Does It Work?p. 49
What Exactly Is an IRA?p. 50
A Brief History of the IRAp. 52
How an IRA Helps to Save for Retirementp. 53
The Traditional IRAp. 54
Who Can Open an IRA?p. 54
Your Contributionsp. 55
Spousal Contributionsp. 56
Deducting Your Contributionsp. 56
Are You Covered by an Employer Plan?p. 57
What Is Your Adjusted Gross Income?p. 58
The Roth IRAp. 60
1. Tax-Free Withdrawalsp. 60
2. Penalty-Free Withdrawalsp. 63
3. Flexible Contributionsp. 64
4. Flexible Withdrawalsp. 64
The Education IRAp. 64
IRAs for Small Businesses and the Self-Employedp. 66
The SEP-IRAp. 68
Is an IRA Right for You?p. 69
The IRA versus the 401 (k)p. 70
1. Can You Open an Account?p. 70
2. How Much Can You Contribute?p. 71
3. Does Your Employer Offer a Match?p. 71
4. What about Income Taxes?p. 71
5. Is Your Contribution Tax-Deductible?p. 72
6. Can You Borrow or Withdraw Funds Before Retirement?p. 72
The Traditional IRA versus the Roth IRAp. 73
The Roth IRA versus the Deductible IRAp. 73
The Roth versus the Nondeductible IRAp. 74
The Old versus the Newp. 74
1. Are You Eligible to Contribute?p. 74
2. Is Your Contribution Tax Deductible?p. 75
3. How Much Can You Contribute?p. 75
4. What Tax Advantages Do You Get?p. 75
5. Do you Pay Taxes When You Withdraw Your Funds?p. 75
6. Can You Withdraw Funds Before Retirement?p. 75
7. When Do You Have to Take Distributions?p. 76
Converting to a Roth IRAp. 76
4. Investment Basicsp. 79
Understanding Investment Riskp. 80
Risks...and Rewardsp. 82
The Volatility Factorp. 82
Understanding Indexesp. 83
Your Time Horizonp. 87
Types of Riskp. 88
Market Riskp. 88
Industry Riskp. 89
Business Riskp. 89
Inflation Riskp. 90
Interest Rate Riskp. 90
Credit Riskp. 91
Reducing Your Investment Riskp. 91
Diversificationp. 91
1. Invest in Different Types of Assetsp. 92
2. Buy Several Investments within Each Asset Classp. 93
Timep. 95
Compoundingp. 95
The Rule of 72p. 96
Market Timingp. 97
Understanding Investment Returnp. 98
How Much You Need to Savep. 101
What Will It Take to Maintain Your Standard of Living in Retirement?p. 103
5. Investment Choicesp. 105
Cash and Cash Equivalentsp. 106
Stocksp. 109
Bondsp. 112
Mutual Fundsp. 116
Picking a Mutual Fundp. 120
Call, Write, or Visit the Web Site of the Mutual Fund Companiesp. 121
Check Out Financial Magazinesp. 122
Consult Low-Cost Mutual Fund Guidesp. 122
Contact Investment Firmsp. 122
6. Investing Your 401 (k) or 403(b) Planp. 125
Asset Allocationp. 126
Getting Startedp. 130
Conservativep. 131
Moderatep. 132
Aggressivep. 132
Prime-Time Earnersp. 133
Conservativep. 133
Moderatep. 134
Aggressivep. 135
Soon to Retirep. 136
Conservativep. 136
Moderatep. 137
Aggressivep. 138
Keep Your Eye on Your Asset Allocationp. 138
Your 401 (k) Investment Optionsp. 141
401 (k) Asset Distribution Trendsp. 146
7. Investing Your IRAp. 149
Your IRA Accountp. 150
Who's the Trustee, or Custodian?p. 152
Your IRA Investment Optionsp. 152
Your Company IRAp. 153
A Bank IRAp. 153
A Mutual Fund IRAp. 154
A Self-Directed IRAp. 155
Moving Your IRA Fundsp. 156
The Asset Transferp. 157
The Rolloverp. 157
Transferring Your 401 (k) Assets to Your IRAp. 159
Consider Your Asset Allocationp. 161
8. Taking Your Money Out of Your 401(k)p. 163
Taking Your Money Out Before Retirementp. 164
The Hardship Withdrawalp. 165
Withdrawals Under Special Circumstancesp. 167
Borrowing from Your 401 (k)p. 169
What Happens When You
Leave Your Current Job?p. 175
Leave Your 401 (k) Savings in
Your Former Employer's Planp. 175
Take the Money Out of
Your Account--In Cashp. 176
Transfer the Funds to a
New Employer's Planp. 178
Roll Over the Money into an IRAp. 178
Withdrawing the Money at Retirementp. 179
Required Withdrawalsp. 179
How Much Must You Withdraw?p. 180
Calculating the Withdrawal Amountp. 182
Term Certainp. 182
Recalculation Methodp. 182
How to Take the Money Outp. 183
Take a Lump-Sum Paymentp. 183
Roll Over the Money into an IRAp. 184
Buy an Annuityp. 186
Leave the Money in Your Plan and
Receive Regular Installment Paymentsp. 187
Leave the Money in Your Plan and
Take Occasional Paymentsp. 187
9. Taking Your Money Out of Your IRAp. 189
The Traditional IRAp. 190
The 10 Percent Early-Withdrawal Penaltyp. 191
Income Taxes Duep. 191
Withdrawing Those IRA Assets Early-- Without Penaltyp. 192
Withdrawing Your Traditional IRA
Assets at Retirementp. 194
Required Withdrawalsp. 195
Borrowing from Your IRAp. 199
Moving Your Traditional IRA Assets-- After Retirementp. 200
The Roth IRAp. 201
Contributions and Withdrawals Are Flexiblep. 202
Taking Your Money Out--Before Retirementp. 202
Special "Hardship" Situationsp. 203
The Education IRAp. 205
Withdrawing the Fundsp. 205
Afterwordp. 207
Indexp. 211