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~Maximize The Value Of Your 401(k) Plan
 
The responsibility for maximizing the potential benefits of your 401(k) plan falls on your shoulders. Here are some ideas to help you get started!

• Participate
If your employer offers a 401(k) plan, you should participate in the plan. The math is simple: if you don't put anything into it, you won't get anything out of it. Once you've made up your mind to get started, don't procrastinate.

•  Take the Company Match
Invest as much as you can afford, but no less than the amount required to receive the full company match. The company match is free money. Think of it as an instant return on your investment!

• Investing
Proper asset allocation and diversification are responsible for the majority of investment returns. Asset Allocation is an  investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon. The three main asset classes - equities, fixed-income, and cash - have different levels of risk and return, so each will behave differently over time. Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

• Monitor
Once your portfolio is in place, monitor its performance, and rebalance when necessary. Rebalancing means bringing a portfolio that has deviated away from the target asset allocation back into line. Under-weighted securities are purchased with newly saved money, or alternatively, over-weighted securities can be sold to purchase under-weighted securities.

• If you change jobs, take it with you!
Transfer your account to your new employer or roll over to an IRA (Individual Retirement Account) when you change jobs. Rolling your retirement funds into an IRA can give you more investment choices and options. If possible, avoid taking as a distribution which would incur a penalty (if under 59 ½) and income tax.

~You cannot keep retirement funds in your account indefinitely. Individuals are generally required to begin lifetime withdrawals from a Traditional IRA or retirement plan account upon reaching age 70½. These withdrawals are called Required Minimum Distributions, often referred to as RMDs, and represent the minimum amount that the US federal government requires you to withdraw annually from your traditional IRA and employer-sponsored retirement plans.

If you participate in a defined-contribution plan, including 401(k)s and 403(b)s, you can put off taking RMDs if you’re still working. This is the case unless your specific plan’s rules require earlier, age-based RMDs or you own 5 percent or more of the company that runs the defined-contribution plan. Roth IRA’s do not require withdrawals until after the death of the owner.

The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” (A separate table is used if the sole beneficiary is the owner’s spouse who is ten or more years younger than the owner.) Withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).

RMD rules are complex, and failure to take a RMD in any given year can result in steep tax penalties. For more information pertaining to your situation please call or email us.  If you need retirement income advice, please don't hesitate to contact Hinton-McCurry, your Atlanta Retirement Planning specialists.