It is mandatory for a 401(k) provider to give an account holder a 401(k) statement each quarter with the current balance of the account, according to Bankrate. If the 401(k) provider also offers online access, the current balance is also available there.Know More
All employees should try to contribute as much as possible to their 401(k) accounts because it offers the twin benefits of a matching employer contribution and deferred taxes on contributions and earnings. As such, the 401(k) is a great retirement savings tool, as explained by Bloomberg.
To benefit the most from a 401(k) plan, account holders need to monitor its returns periodically. This can be done by looking at the mix of bonds and shares that it invests in. Bonds typically provide a 5 percent rate of return, while shares provide a 10 percent rate of return, as explained by Bankrate.
Another factor that can affect the rate of return on a 401(k) account is the fee paid to the fund manager, according to Kiplinger. One way for employees to maximize the returns on their 401(k) accounts is to find out the amount being paid in the form of fees and then ask the employer to shift to a lower charging fund manager if possible.Learn more about Financial Planning
If a 401(k) plan allows loans, employees can borrow at least $10,000 and a maximum of the lesser of 50 percent of the vested account balance or $50,000 as of 2015, reports the IRS. The account holder must pay back the loan within 5 years unless an exception applies.Full Answer >
Loans are optional in 403(b) plans, but if the sponsor permits them, the maximum an employee can borrow is the lesser of $50,000 or 50 percent of the vested account balance, reports the IRS. The participant must make at least quarterly payments and repay the entire loan within five years.Full Answer >
Mandatory 401(k) withdrawals at age 70 1/2, known as required minimum distributions, are calculated by dividing the balance in the 401(k) account on December 31 of the previous year by the life expectancy of the account holder, reports Bankrate. Life expectancy is determined using the appropriate IRS uniform lifetime table.Full Answer >
An irrevocable living trust is used in estate planning to reduce the amount of an estate subject to estate taxes by transferring ownership of assets to the trust, reports Bankrate. Different types of irrevocable trusts exist to meet specific estate situations, according to CNN Money.Full Answer >