401k lying in the dust?

How to make sure your retirement is on track!

As you dream of your perfect retirement, and what you really want to do with your life, don't forget to factor in your 401(k)s— so you can make sure you’re taking care of your future through retirement contributions.

Millions of people are leaving money on the table?by not rolling over their 401(k) when they switch jobs.

You might be one of those people.

Did you know that if you don't roll over your 401(k), you could be missing out on investment options and growth potential?

Don't let that happen to?YOU.

Believe me when I say I want you to have the retirement you've always wanted. Truly.

Your 401(k) is one of the most important factors in ensuring a solid retirement, yet according to a recent study by Capitalize there are 24.3 million forgotten 401(k) accounts in the US. These forgotten 401(k) accounts have approximately $1.35 trillion of assets in them, representing 20% of the $6.7 trillion total assets in 401(k) plans.

Furthermore, according to the National Institute on Retirement Security, around 60% of Americans have no retirement savings at all.

Today I'll get right to it and answer your 401(k) questions so you can avoid turning your retirement dreams into a nightmare and ensure that your 401(k) is not lying in the dust:

What exactly is a 401(k) and how can I tell if I have one?

A 401(k) is a savings plan that's sponsored by your employer. The money you contribute to your 401(k) is deducted from your paycheck before taxes are taken out. This means your contribution reduces your taxable income for the year, which can lower your tax bill.

There are two types of 401(k)s: traditional and Roth. With a traditional 401(k), your contributions are made with pretax dollars. This reduces your taxable income for the year, but you'll pay taxes on the money when you withdraw it in retirement.

With a Roth 401(k), your contributions are made with after-tax dollars. This means you won't get a tax break on your contribution now, but your withdrawals in retirement will be tax-free.

Most employers offer a 401(k) plan, and if you're not sure if yours does, just ask your HR department. Once you know your employer offers a 401(k), the next step is to sign up.

If you already have a 401(k), congratulations! Make sure you are taking advantage of any employer-matching contribution. Employers frequently provide a cash match for any amount contributed to their 401(k) plan, typically capped at a certain amount of your compensation. Anywhere from 2% to 8% is typical, but the middle of the range tends to be more common. In a simple example, a worker earning $100,000 annually and receiving a 4% employer-match could contribute up to $4,000 by themselves and receive an additional $4,000 from their employer – for a total of $8,000. Higher balances ultimately lead to faster compounding, which can help people build wealth much faster than they would otherwise.

You can contribute up to $20,500 in 2022 from your own compensation into a 401(k) plan, which excludes any amounts contributed by your employer. In 2022, the maximum amount that may be contributed to a 401(k) – including employer and employee contributions – is $61,000 ($67,500 if age 40 or older).

If you're not taking advantage of an employer match, you're leaving money on the table.

When I switch jobs, what happens to my 401(k) account?

Your 401(k) stays with you when you leave a job. You have a few options for what to do with the money in your account.

You can cash out your 401(k), but I don't recommend it. If you withdraw money from your 401(k) before age 59 1/2, you'll owe income taxes on the withdrawal, plus a 10% penalty.

You can leave your money in your old employer's plan, but again, I don't recommend it. Your money will continue to grow tax-deferred, but you may have limited investment options and lower returns, and you may be charged higher fees than you would be in another type of account.

If your new employer offers a 401(k) plan, you can roll over the money from your old 401(k) into your new account.

The best option is to roll over your 401(k) into an IRA. An IRA, or individual retirement account, is a personal retirement account that you set up and fund yourself. When you roll over your 401(k) into an IRA, you can choose from a much wider range of investment options, and you may be able to lower your fees.

The Herfinance Club is all about getting the most bang for your buck, and an IRA does just that.

So, if you've been putting off that to-do list item for a while, we've got a much easier solution. (It's actually quite enjoyable!)

How do I move my 401(k) funds to an IRA?

The process of rolling over your 401(k) into an IRA is called a direct rollover. With a direct rollover, the money goes directly from your old 401(k) to your new IRA.

Rolling over your 401(k) is a pretty simple process with Capitalize. They rollover your previous 401(k) into a new or current Individual Retirement Account (IRA.) They handle all of your paperwork for FREE, including calling your 401(k) provider, filling out paperwork, and sending documentation.

They will even help you find old 401(k)s

Capitalize is focused on providing modern tools to move your money and easily understand your options so you can make informed decisions and not leave your 401(k) account behind to lie in the dust.

Start your rollover online in minutes HERE

It's worth noting that while Capitalize is an affiliate link, which means Herfinance Club may earn a commission if you purchase anything at no additional cost to you, it does not have any bearing on my suggestion.

I love Capitalize because I know how overwhelming it can be when changing jobs and trying to figure out what to do with your 401k. Many employers fulfill their legal responsibility to provide departing staff with information on their alternatives. Unfortunately, this knowledge is often complex and jargon-ridden, which means it's rarely read.

So of course, I totally understand why individuals opt to take the path of least resistance and leave their 401k behind.

Food for thought a well-allocated retirement account in the long term could yield nearly $700,000 more to use towards retirement over 30 years — or about 13x more than a forgotten 401(k) in a low-return investment.

Don't let your hard-earned retirement savings languish in a forgotten 401(k) account. Roll it over into an IRA that you own & control to take advantage of better investment options and lower fees. It's a simple process when done with Capitalize .

And if you don't have a 401(k), you can still save for retirement with an IRA. So there's no excuse not to start planning for your retirement today!

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Here’s to your financial wellbeing!

Sue?

Founder?Herfinance Club

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