Information on 401k Options
This article will help you find all you need to know about the 401k plan in your company.
You need to understand your own plan options. Every 401k plan is different; however, they all have one document, available from your Human Resources Department, called the Summary Plan Description.
This is where you will find all the details on your own 401k options. It is important that you actually read it. Some surveys have suggested that most employees feel their retirement benefits are more confusing than their health care benefits. This is not really a surprise. There is little formal education required for a college degree on the subject of investing for retirement or investing in general. It is no wonder most people feel this way about their retirement benefits.
The most important thing you will find in the Summary Plan Description will be the investment options available to you once you enroll in the plan and begin making contributions. Depending on your plan these investment options may be divided between what is referred to as the main menu and a self directed brokerage account. The main menu typically consists of a selection of mutual funds picked by your company’s Plan Provider, perhaps a company like Fidelity Investments, and approved for the plan by members of your company that serve on an investment committee. There are usually ten or more mutual funds from which to choose. The main menu may also include the option to buy your own company’s publicly traded stock.
The self directed brokerage account is a bit different. Here the investment choices are generally broader than those available on the main menu. Your investment committee, at the recommendation of the Plan Provider may have imposed limitations on this option. There may be a limit as to how much of your plan assets you may journal to this option. In addition, there may also be annual fees associated with this 401k investment option.
Again, your company’s 401 Summary Plan Description will be the place for you to find those answers.
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