401k Advice For Avoiding Pitfalls
Posted by Matthew Alberto in Finance
Some common sense 401k advice can help you to avoid some of the most common pitfalls related to these plans. The first thing to know is that having a 401k plan alone is not sufficient. You should seek to contribute to the maximum annual limit of the plan every year. Also, do not be tempted to use your 401k plan like a savings account and cash out to get through a "rough patch."
Withdrawing money from a 401k will put a dent in the balance that will compound over time, and you will likely incur a tax penalty in addition to income taxes if you are not yet at retirement age. Another mistake to avoid is investing your 401k in a vacuum. Your 401k plan should be invested as part of your overall financial plan, which includes all of your other investments. Not fully participating the company match plan is another big mistake. This is simply turning down free money.
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