Tony Krance, MBA, CFP®, AIF®, ERPA's Answers and Guides

Hi Rueben ...This is a difficult question. However, if at all possible take advantage of the employer match. Although the loan interest is 7% the match equates to a 50% return on your money. I would suggest developing a budget with the 401k and the loan repayment. Once the budget is developed the hard part begins, remaining discplined. Further, any future pays raises should go toward paying off the loan. Seek a professional adviser if possible to help.

Hi Edward, The plan sponsors (employers) have a fiduciary duty to supply employees with a prudent investment lineup. Many employers do not realize that they are personally liable for any fiduciary breaches. The risk and liability to offer a plan which is open to all investments would be expensive and impossible to monitor for imprudent investments. Your best alternative is to seek help in building a globally diversified portfolio with the correct risk level for your situation. If you cannot accomplsih with the investment choices available ask your employer why not? Finally, don't give up on America and the free markets.

Hi Mia...This is a great question..at the risk of sounding redundant I would recommend consulting with an investment professional to determine what is the best course of action for your family. There are advisors who charge by the hour or assets under management. So your options are many. Only through a personal interview can it be determined what is best. Each individual and individual family are different so please take the time and money to find YOUR solution. Good luck.

Frank, the advice given has been excellent. One added thought is you do not have to convert all your 401(k) to a Roth 401(k). Converting a portion might be a great compromise. This will give you flexibility in your income planning once retired. Remember no one can tell you what taxes will do in the future, so all strategies will carry risk. Also seek the advice of a tax and financial planning professional.

Hi Latvina..All the answers given are good. I might add that in any portfolio used for retirement saving you should know two numbers, expected return and expected volatility. Without these two numbers you are speculating with your retirement savings. Your portfolio should be globally diversifed which is risk adjusted for your time horizon to retirement. Seek the guidance of a professional adviser who follows the fiduciary standard.

Hi Arianna First of all congratulations in asking this question. This is the first step in developing a financial plan. I believe the most important question you can ask is, Is the advisor willing to act as a fiduciary advisor to you. This should be in writing and it will reduce or eliminate any conflicts of nterest in your relationship. Good luck you have started on the right path.

Hi Farrah...great question. This is really a question that varies on a case by case basis. You should consult with a tax professional to determine the best situation for you. Both have benefits in that the 401k is tax deferred, while the Roth 401k allows tax free distributions. Another benefit of the Roth 401k is when you leave your employer and you roll to a Roth IRA you are exempt the the required minimum distributions after age 70 1/2. Some requirments to the Roth are you must not distribute until 5 years after you establish the plan. In my opinion if you believe tax rates will increase in the future, at least a portion of your retirement savings should go to the Roth 401k. Of course, I have not touched on all the differences, so again, I recommend you consult with a tax professional. Hope this helps.