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How do i enroll in the 401 plan?

May 14, 2014 by tina from Hartford, CT in  |  Flag
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7 votes
Peter C. Karp Level 20

Hi Tina,

As the other advisors have mentioned, you should indeed begin by contacting your company’s HR department to determine if you are eligible to participate in the plan as well as the plan specifics. Some employers, for example, offer “matching” contributions and will match a percentage of your deferral.

It is always a good idea to enroll in your company-sponsored 401K plan as soon as possible so that you can begin to take advantage of the tax benefits and savings for retirement.

Please call us at (415) 345-8185 if you have any questions.

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Comment   |  Flag   |  May 20, 2014 from San Francisco, CA

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4 votes

Through your employer's HR Dept.

Comment   |  Flag   |  May 14, 2014 from Canton, GA

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2 votes

Hi Tina! I'm glad that you are ready to save for retirement. First, check with your manager or the HR department at your company to find out more about your specific plan. While these savings plans work much the same, your investment options and sign up details will vary according to the decisions made by your firm.

In general, you will be able to contribute a portion of your pay now and not pay taxes on it until you take it out at retirement. Many companies match your savings, so think of this money as part of your compensation. Be sure to save at least as much as the company will match.

Be careful that you have an emergency fund in place and that you can afford to save in this long-term plan. I have seen many people take money out of their 401(k) plan as either a loan or withdrawal and then end up paying penalties on top of the taxes as they are under 59 1/2. These funds should not be used to pay off credit cards or make new purchases. This money needs to be set aside solely for retirement. Good luck on your savings journey!

Comment   |  Flag   |  May 14, 2014 from River Hills, SC

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2 votes

TIna, Normally, your company's HR director will be the best contact for you with regards to your company's 401(k) plan. They will provide you with information as to when you can enroll and what steps you should take in order to do so.

As some other advisors have suggested, you should look carefully at the plan's specifics as to what (if any) match there is and what type of vesting schedule there is.

One piece of advice I pass along to my clients: try to treat your contributions as your monthly "retirement bill" the same as you would your power bill, phone bill, etc . . . This is your opportunity to invest in your future - the earlier and more you do it, the better off you will be down the road.

Best of luck!!!

Comment   |  Flag   |  May 14, 2014 from Charlotte, NC

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1 vote

Hi Tina, If you contact your HR department they will be able to tell you when you're eligible to and how to enroll. (Some plans have eligibility requirements, including length of service.)

They should also be able to tell you whether there is an employer match and how it "vests." Vesting is a fancy term that details how long it takes until the employer's match is yours and can't be taken back. Immediate vesting means that all contributions the employer makes to your account are yours to keep, immediately. Other vesting schedules will say you can keep x% after year 1, another x% after year 2, and so on.

They should also be able to tell you about the investments available in the plan, but they probably won't be able to make any recommendations. You'll want to do a little research or enlist the help of a trusted advisor or financial professional to help you select appropriate investments. Simply choosing last year's big winners doesn't usually lead to future success.

Good for you for taking an important step towards your retirement and financial well-being!

Comment   |  Flag   |  May 22, 2014 from Suffolk, VA

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