Questions to Ask About Your 401(k)

by Craig Moser on January 6, 2017

An employer-sponsored 401(k) savings plan is a great vehicle for accumulating wealth on a tax-deferred basis.  Because all 401(k) plans are not created equal, you may need to improve the plan so it better meets your needs.  All you have to do is ask the right questions.

Employer Match

Ask whether your employer offers a company match.  If so, make a point to contribute enough to receive the full employer match.  That’s free money, and another way of building your savings.  Over time, your employer match adds up.

Index Funds

All 401(k) plans come with mutual funds (a strategic mix of stocks, bonds, and other investments), but not all come with index funds (a basket of stock or bond holdings.)  Index funds aren't usually traded as much as mutual funds, and that can translate to lower costs and higher return potential for you.  Because they don't require a lot of management and remain in the market, your costs are lower and ROI potential is higher.  If your 401(k) doesn’t include index funds, be sure to ask for them.

Fund Selections

Ideally, your options will include index funds with global stock and bond holdings, a cash account, and target-date funds with predetermined portfolio selections.

To select the fund that best suits your needs, take the time to educate yourself and thoroughly understand each option.  You should also consider the impact each fund may have on your overall financial plan.  Ask a qualified financial professional for help with any questions you may have.


Undesirable Features

401(k) plans sometimes come with fees.  For example, some plans have “proprietary” funds where a middle-man charges extraneous expenses.  Other undesirable features can involve “revenue sharing” fees, or the fund company compensates the fund provider for being in your plan.  Sometimes there may also be wrap and 12b-1 fees, and commissions.  These are undesirable features that can be passed onto you as expenses.  In turn, those expenses eat into your retirement savings.  Be sure to ask your employer about all expenses so you’re fully aware of any potential downsides that may exist.

Peace Of Mind

If your 401(k) is just one piece of your financial plan, then it’s important you make sure it works in conjunction with your other financial strategies.  To receive expert guidance from our qualified advisory team please contact us at or call us at 336-448-1086.

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