5 Questions To Ask Before Contributing To A 401(k)

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Starting a new job is always exciting - it's a chance to meet new people, learn a new skill, and ultimately it's a stepping stone in your journey towards achieving your career goals. What makes it even more exciting, though, is when you find out that your new employer offers a 401(k) plan.

Before you do anything, however, it's important to sit down with both your employer and your financial planner so that you can address any questions and get all of the information you need to ensure that you approach saving for retirement correctly. Below, we've listed out five of the most important questions we think you should ask.

1. When am I able to start contributing?
Depending on the job, you may automatically have been enrolled in a 401(k) plan or you may have to enroll yourself after a certain amount of time has passed. Since you don't want to miss out on valuable savings opportunities, you'll need to know exactly when your contributions will start kicking in. If you are required to wait until you've been employed for a few months or maybe even a year, consider other retirement plans such as IRAs and Roth IRAs in the meantime.

2. How much am I able to contribute each year?
This one is extremely important, as all too often people don't save enough simply because they didn't know how much they were allowed to contribute. In 2016, the maximum contribution limits for employees under 50 years of age is $18,000. For employees that are 50 or older, the contribution limit is $24,000, which includes a $6,000 catch-up contribution that is permitted.

3. Does the company offer a 401(k) match?
A lot of times, companies will offer a 401(k) match and contribute what some like to say is "free money" to your plan in addition to what you're already contributing. However, for some plans, you will be required to contribute a certain amount before you become eligible to receive a supplemental contribution from your employer. To ensure that you aren't missing out on any of this "free money," ask your employer how much you are required to save in order for them to do the same on your behalf.

4. When do I become 100% vested?
While the money that you contribute to your 401(k) plan is always yours and available for you to take if you should leave your job, sometimes the money that your employer contributes does not become fully yours until you've been employed for a certain amount of time. That said, if you don't think that the job you're at is going to be your forever job, it's worth it to try and stick it out until you are fully vested so that you will receive, in full, what your account balance reflects.

5. Are there account management fees?
Last but not least, you should always be familiar with any fees that are applied to your investments and/or for the management of your account. This is normal, but if your account fees are high and you're unaware, it can be pretty disheartening when you check in on your account balance for the first time and see a ton of money taken out. At the very least, you'll at least want to be prepared!

As a team of financial planners that has worked with many clients on their retirement plans, we know exactly what questions you should be asking and what you should be doing as far as investments to ensure that you set yourself up for a successful financial future. 

To sit down with one of our financial advisors and talk about your 401(k) plan, please give us a call at (516) 932-5130 or email info@americaninvestmentplanners.com today.

5 Mistakes To Avoid With Your First 401(k)

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

There is certainly a lot that comes with starting a new job - adjusting to a new work schedule, meeting new people, traveling to a new place, and learning new skills. But aside from the obvious things you'll do and learn about in your first few days in the office, there's one topic that all new employees (especially millennials who are new to the workforce) need to inquire about - the company's retirement plan.

If you recently started a job where you'll be contributing to a 401(k) plan for the first time, below are a few mistakes you'll want to avoid in order to get the most out of your efforts.

1. Not contributing enough for an employer match.
Some companies are generous enough to offer an employer match, meaning that they'll contribute a certain amount of money to your retirement account so long as you do. If that's the case, absolutely take advantage of it - it's almost like getting free money if you really think about it! Since you'll likely have to contribute a certain amount to be eligible for a match, make sure you ask about the specifics before you submit your contributions.

2. Not knowing how long you need to be employed to receive the full benefit.
Just because your employer is contributing to your plan doesn't mean you're eligible to keep that money right away - there's usually a specific amount of time that you must be employed in order to become fully vested in the plan. That said, if you know you won't be at your current job forever, at least make it a priority to stay there until the time where all of your savings officially become yours.

3. Changing investments too frequently.
The market is going to change and your savings are going to fluctuate. And since this is so, you're better off not checking your account every time you get paid - if you do, you may be disappointed with short-term results and be encouraged to change your investments when you really shouldn't. Instead, make a schedule for when you'll check your account balance and stick to it - maybe once a quarter, once every six months, or perhaps even just once a year.

4. Failing to ask questions.
As a first time full-timer, you may not know too much about investments and that's absolutely okay. However, you shouldn't let a lack of knowledge sabotage your retirement savings efforts. If you aren't sure about the different investments offered by your plan and/or don't know how to allocate your contributions, seek the advice of a financial planning professional.

5. Cashing out before your time is up.
Unless you qualify for a hardship withdrawal, there's no reason why you should be taking money out of your 401(k) plan before you reach full retirement age. Even if you're leaving a job, there are ways that you can have your savings follow you and roll over into a new plan - all you have to do is ask about your options. When you cash out before you're truly eligible to, you'll subject yourself to various tax penalties and ultimately, lose earnings.

All that said, do you still have questions about how to approach a 401(k) plan for the first time? For access to advisors that have all of the answers you need, contact us at (516) 932-5130 or email info@americaninvestmentplanners.com to set up an appointment with the team at American Investment Planners LLC.

How To Handle Your 401(k) When You Change Jobs

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Although some people are fortunate enough to find a job that they can excel and grow in at the start of their career, many others experience a job change at least once during their time in the workforce. But when the position being left had offered a 401(k), what is one to do with the money that has been invested and saved? Below, we offer some advice on how to handle your 401(k) as you begin a new journey in a new job:

Leave your money where it is: Even if you will no longer be a contributing employee, some employers may allow you to keep your money in their 401(k) plan. However, if this is the option you choose to use, ask your previous employer for all of the rules, regulations and policies regarding the plan, as you may be subjected to some new management fees or have different withdrawal opportunities.

Roll your money over: Should your new employer allow you to roll over previous 401(k) funds, this may be the right option for you as it will allow you to keep all of your retirement savings in the same place - past and future. But, like we said in our previous tip, there may be different rules that apply to rolling over savings, so speak with your new employer to learn which do and do not apply to you if this is the approach you choose.

Open an IRA: If you don't have the opportunity to roll your savings into a new 401(k) plan yet, or if your new employer doesn't offer a 401(k) plan at all, consider opening up an IRA account and place your previous savings in there. Just like in a 401(k), your money can grow on a tax-deferred basis in an IRA, and you may even find that more investment opportunities are presented to you.

Avoid cashing out: As you work out the details on how you'll continue to save for retirement, the one thing you shouldn't do in the meantime is take out what you've already saved. Not only will doing so put you back to square one in your retirement saving efforts, but unless you've reached retirement age, you'll have penalties to deal with.

As you weigh your options, your best bet is to meet with your financial planner, since they know your financial goals and can therefore determine which solution is best for you depending on the opportunities available. Here at American Investment Planners LLC, our financial planners are dedicated to learning all about your investment philosophy and financial needs, so we can create a retirement planning strategy that brings you success even when you accept a new offer of employment.

For more information about our retirement planning services, please call (516) 932-5130 today.

Ways To Save For Retirement Without A 401(K)

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

When applying for a job, one of the most pressing concerns for potential employees is whether or not a 401(K) plan is offered by the employer. However, it isn't uncommon to find and land a dream job that doesn't offer one - but then what? Retirement is going to come sooner or later, and by that point it will be essential that you already have enough saved up to carry you through.

If you do not have a 401(K) plan available to you through your employer, here are a few alternative ways that you can save:

Roth IRA accounts: Roth IRA accounts are nondeductible IRAs that permit tax-free withdrawals so long as certain conditions are met. Although they generally have the same contribution limits as a traditional IRA, the fact that you don't have to pay taxes on the earnings or the withdrawals is a major plus. For more details on the benefits of this type of account, please click here.

Use direct deposit: When participating in a 401(K), the contributions are immediately withheld from your paycheck and deposited into your 401(K) account. The good news? This can easily be replicated with an IRA or other investment account that you have set up. This way, you won't necessarily be responsible for needing to transfer your money into different accounts on your own; rather, it will be done for you just like it would be with a 401(K).

Open a savings account: If you don't already have a savings account, open one up and dedicate it to retirement. Then, create a plan for yourself that dictates when and how money will be deposited. Whether you choose to contribute biweekly, monthly, or in some other shape or form, the simple act of putting some money aside whenever you can is a great way to build up your savings for the retirement phase of your life.

For additional ways to save for retirement without using a 401(K), check out this article from U.S News and World Report MONEY. 

Did you know that retirement planning is one of our specialties here at American Investment Planners LLC? From 401(K)s to Roth IRAs, traditional IRAs and more, our team knows what it takes to prepare our clients for a successful future. 

For more information about how we can help, please give us a call at (516) 932-5130.

Can You Withdraw From Your 401(K) Early?

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

In times of financial hardship, it's only natural to seek income from outside sources. Maybe you have family members who have the ability to lend you a hand in your time of need. Or, perhaps you are able to refinance some of your current loans to lessen your payments, leaving you with some money left over to take care of your current concerns. Though both are valid approaches, another route many often consider is to borrow from their 401(K), even when they are far off from retirement age.

That brings us to today's question - can you withdraw from your 401(K) early? 

Although your 401(K) is designed to help you save for the point in your life where you no longer receive a steady pay check, the truth is that you can borrow from it ahead of time. However, doing so will cost you in penalties, which can vary depending on the situation.

The following are three types of withdrawals you can make before you reach retirement age:

Hardship Withdrawal

While your plan may define a hardship differently than another, common examples of hardships include sudden disability, the loss of a loved one where you are responsible for burial or funeral costs and the need to cover medical expenses. Although you will likely still face the early withdrawal penalty and owe taxes, it doesn't hurt to inquire about whether or not your hardship qualifies you to receive money penalty-free.

Loan

Many companies offer their employees the opportunity to borrow from their 401(K) in the form of a loan where they pay themselves back through interest. Though this type of withdrawal can be used for any circumstance, there are often restrictions about how much you can take out so you'll need to borrow wisely. 

72(t) Withdrawal

Under the IRS rule 72(t), you are permitted to withdraw a fixed amount of money based on your life expectancy. As explained by CNN Money, this rule explains that "you must take withdrawals for at least 5 years or until you reach age 59 1/2, whichever is longer." For this type of withdrawal, keep in mind that although there isn't a penalty for borrowing early, you are still required to pay taxes on what you take out.

Still have questions about withdrawing from your 401(K) before you become eligible to retire? Contact American Investment Planners LLC! We specialize in retirement planning and are well versed on various aspects of the retirement planning process, including 401(K) plans and how borrowing from them works. To speak with a member of our team, please give us a call at (516) 932-5130. 

Your To-Do List Before Participating In A 401(k) Plan

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

When seeking employment opportunities, one of the first (and considerably most important in our eyes) questions candidates ask is whether or not a 401(k) plan is offered. Since the purpose of a 401(k) is to help individuals save and prepare for retirement, it is crucial for employees to take advantage of such plans the moment they become available to them.

However, entering into a company sponsored 401(k) plan is more than just saying "sign me up;" a lot of thought and decision making goes into the process! If the opportunity to participate in a 401(k) plan is in your future, here are a few things you must find out and consider first:

Company Contributions: One of the greatest benefits of some 401(k) plans is that companies match the contributions their employees make in one way or another. Since matching rates will likely differ from company to company, the first step you should take is to figure out how much you have to contribute to get the most in return from your employer!

Plan Management: Many 401(k) plans come with fees attached for the management of the plan. When deciding how much you plan to contribute, keep in mind that some of your savings will be deducted for reasons such as investment management and general bookkeeping by your plan sponsor. Though they may be minimal, they are certainly something to consider since they directly influence your account.

Investment Opportunities: Chances are your 401(k) plan will have a variety of investment options available for you to split your money between. Rather than make a snap decision about where your contributions will go, do some research to learn more about what each investment means and how they match with your personal financial goals.

Considering that 401(k) plans play a critical role in saving for retirement, it's important to fully understand all of the aspects of your plan. But since financial topics like 401(k) plans can be confusing, we at American Investment Planners LLC have a team of retirement planning experts ready to educate you so can fully understand your 401(k).

Here at American Investment Planners LLC, we also offer tax planning, estate planning, retirement planning and more to generations of families throughout the United States. For more information about our services, please visit www.americaninvestmentplanners.com.

Getting Ahead: 5 Tips To Help You Plan For Retirement

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Retirement - the time of your life that is supposed to be spent relaxing and stress free. After years of dedicating your life to your work, this stage is meant to be one where you can sit back and enjoy all else that this life has to offer. However, although one would assume that this period is where our worries are limited, all too often, people still find themselves carrying heaps of stress on their back because they have not properly prepared to no longer receive a paycheck every week or two.

In order to ensure that you will be financially stable upon retirement, it is crucial to plan and prepare for it as early as possible. While that does not mean you have to stash away every penny that winds up in your pocket, it is highly recommended that you take as many proactive steps as possible to begin contributing to your financial future. See below for a few tips on how you can prepare for the next stage of your life -

1. Take advantage of your employer's 401(k) plan if one is available to you. Even if you contribute the minimum amount, you'll be setting yourself up for future success.
2. When seeking employment, always ask if pension plans are part of their package. If so, be sure that you fully understand what it entails and find out what would happen to your pension if your position were to be compromised.
3. That being said, if you do participate in an employer sponsored retirement plan, don't touch it! Although it can be tempting to withdraw from your savings, you will find yourself right back where you started and potentially lose out on even more money if you are required to pay withdrawal penalties.
4. Consider opening an Individual Retirement Plan (IRA). Regardless of whether you choose a traditional IRA or Roth IRA account, you can easily start putting money aside to assist you later in life.
5. Be aware of your retirement needs. By keeping up with the cost of living and knowing what bills or debts you may still have to pay, you can better prepare in terms of how much you should be saving each month.

For more tips on how you can plan for retirement, please click here.

At American Investment Planners LLC, it is our hope that each of our clients live comfortably once they reach retirement age. Did you know that retirement planning is one of our specialties? If you would like to rest assured knowing that you have a solid financial future ahead of you, contact us to sit down with our retirement planning experts today; we can develop the most effective strategies to assist you with your long term financial goals. To learn more about how we can help, please visit us at www.americaninvestmentplanners.com or give us a call at (516) 932-5130 or toll free at (866) 932-5130 today.