*Scared to open your 401K statement?

Financial Stress

*Don’t think you will ever recover from the losses?

*Too many investment choices and don’t know how to evaluate?

This ebook will help you open your statement, figure out your 401k contribution limits and gain confidence-knowing that your money is working for you- in your time frame, with your risk tolerance, and with the return you need to meet your goals.

You deserve to have confidence in choosing and maintaining the most valuable investment you own-your 401K plan.

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Part of a good 401k  plan and retirement plan, is making sure that both spouses have enough retirement income that will last their whole lives.

Because women live longer than men and make less, should they invest more aggressively to get the 401K maximum? Think about this as you manage your 401k assets.

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Will you be more aggressive with your retirement plan in your younger years and then conservative?

Will you stay moderate throughout your peak earning years yet add more each year?

Will you stick with a moderate portfolio throughout your lifetime even though you risk less income at retirement?

All great questions to ponder around women’s finances when you review your statement each year.

This is a great article that addresses that issue although I think there are more choices for women than what they recommend.

How Retirement Planning Shortchanges Women

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The U.S. Department of Labor wants to expand accountability for employer-sponsored retirement plans to investment advisers.

The proposed ruled announced today would broaden the definition of “fiduciary” to further protect 401(k) participants from conflicts of interest, such as investment advisers recommending an option that brings in higher fees or promotes their own firm’s funds, according to the department. A fiduciary under Labor Department rules must act in the best interest of the worker in the retirement plan.

“This current rule simply is not working,” said Assistant Labor Secretary Phyllis Borzi in a conference call today.

Those giving advice on an investment would be considered a fiduciary under the rule, Borzi said. “If all they are doing is selling their product then they aren’t going to be a fiduciary,” she said. Employers generally have been held accountable for ensuring participants in 401(k) plans are given advice and investment choices in their best interest.

The regulation would classify advisers as fiduciaries even if they don’t provide advice on a regular basis. The measure would apply to employer-sponsored retirement plans and individual retirement accounts, according to the department. A comment period will last until Jan. 20, 2011, Borzi said.

“We are reviewing the proposal,” said Rachel McTague, spokeswoman for the Investment Company Institute, a Washington- based mutual-fund trade group.

$3 Trillion

An estimated 72 million participants have 401(k)-type retirement plans with assets totaling about $3 trillion, according to the Labor Department.

Last week the Labor Department announced regulations that will require 401(k) plan providers to provide investors information on administrative and investment fees charged to their accounts in their in quarterly statements by Jan. 1, 2012.

Boston-based Fidelity Investments, Vanguard Group Inc. of Valley Forge, Pennsylvania, and Baltimore-based T. Rowe Price Group Inc. are among the largest providers of 401(k) plans, according to Morningstar Inc., a Chicago-based research firm.

To contact the reporter on this story: Margaret Collins in New York at mcollins45@bloomberg.net.

401K contribution limits for 2010 are $16,500 for employees. Employer contributions are limited to 6% of the employee’s pre-tax compensation under the 401k rules.  If you are 50 and older, you can contribute an addition $5,500 for a total of $22,000.

For example, if you earned $100,000, you could contribute a maximum of $16,500 in 2010 before taxes and your employer could contribute up to another $6,000 for a total of $22,500 in money going into your 401K. Those are the 401K limits for people under 50.

Let’s assume that you are over the age of 50. You could contribute the maximum of $16,500 plus an additional $5,500 bringing the total of $22,000 contributed on a pre-tax basis according to the 401k rules.  If your employer also contributed the maximum of $6,000, you could have a total of $28,000 put into your account in one year. Those are the 401K limits for people over 50.

Check your 401K plan summary plan description for 401K rules about taking a distribution while you are working.Your employer can tell you the 401k contribution limits, when you vest, and how much you can take out. Of course 401k rules only let you do this if you are past age 59.5 or the 401K penalties are severe. But if you need to supplement a reduced paycheck due to less work hours, then take small monthly amounts out to help you. Be prepared to pay the income tax on those distributions too.

Watch out for the number of hours that you work. At some companies if your work hours fall below 1,000 hours per year, then some 401K plans will eliminate matching contributions or prevent you from participating in the 401K plan. Check the 401K rules concerning this in your 401K plan. Your employer can tell you the 401k contribution limits

Many people worry about contributing to their 401K.  Your employer can tell you when you vest and what your 401k contribution limits are. Many people think that can’t afford to contribute. They worry that they won’t be able to live on the lesser amount of income. What they don’t realize is that if they contribute say, for example, $10,000, and they make $50,000 a year: they only pay tax on $40,000 not $50,000. so the tax savings is giving you back some money to make up for that $10,000 contribution. How much? Well, that depends on your tax bracket. Obviously, the higher the tax bracket that you are in, the more advantage you get. As your earnings grow so does your 401K balance. To get the maximum 401K balance, add your bonuses and increased earnings to the amount you contribute.

Hint! Hint!- Don’t ever get a tax refund– that’s a interest free loan to the government. Have your tax preparer give you the extra monthly cash by changing your withholding exemptions to the proper amount to adjust for your 401K contributions.

Ok- everyone wants their 401K account to go up in value all of the time- right? Well, fat chance. Markets go up and down all the time and lately it’s more down than up. So hang in there because what goes around comes around again and again. Here are some tips to smooth out the bumps and get the maximum 401K values you can:

Diversify across categories. What’s a category? It like stocks, bonds and cash.

Diversify across asset classes. What’s an asset class? It is like large cap, mid cap and small cap could be under your stock category.

Diversify across asset styles. Let’s say you have a stock category and you have a large cap stock fund in it. You could further diversify into a large cap value stock fund and a large cap growth stock fund.

Keep your costs low. Use only no-load mutual funds or index funds.

Get an asset allocation and stick with it. What’s an asset allocation? It is the percentages that you put into each asset class. Say you want to put 60% into stock. You could put 20% into large cap, 20% into mid-cap and 20% into small cap.The higher you put into stocks, the higher the risk and volatility of your portfolio.

Rebalance once a year. That means if you put 60% into stocks at the beginning of the year and it grows to 65% at the end of the year, take that 5% and add it to another class that is doing poorly. You will be constantly selling high and buying low. Guess what? That makes you money not limit your gains.

Stick with it! No matter what Fox News or famous Joe Money blogger tells you, if you keep moving in and out of funds, you are gambling -not the right way to get maximum 401K values.

Get the 401k maximum balance going for you right now.

You may think that you can make more money by investing outside of your 401K, but that is misleading. If you are eligible to contribute to your 401K plan then your first investment dollars should be an option within that plan. Don’t be tempted by short term gains elsewhere until you have contributed up to your contributions limits. Here are three reasons why:

1. Tax Savings.You contribute money into your plan with pre-tax dollars. That is a huge advantage in investing because more of every dollar you earn goes into your plan for your benefit.

2. Tax Deferral. All the investment income- interest, dividends, and capital gain distributions are not taxed within your 401K plan. That means your money will grow much faster without tax on the investment earnings.

3. Automatic Increase in Contributions. If you are putting a percentage of your salary into your 401K plan, then as you make more money your contributions to your plan increases. When you contribute more, you have the potential to accumulate more. You can find more ways to maximize your 401K at http://401Kmaximum.org

When you look at the powerful advantages above, it is hard to find any investment that can build wealth as quickly as a tax deferred plan like the 401K. Of course, there will always be high risk, high reward investments around who will tempt you to invest. With the 401K plan, even if you choose poor performing investments, over time you will have done better than if you had those same investments outside of the 401K plan. By remembering the 3 reasons above, you will stick to contributing the maximum to your 401K plan and watch the money pile up.

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You can contribute to a 401K plan that your employer provides through your paycheck. The money will be deducted from your paycheck and put into your 401K account before you pay taxes on it. Sounds scary? Nah, you won’t miss it. You are an adult now and you are saving money for your future. Go for it!

This is an automatic way to save. You get the immediate benefit of paying less taxes for the year. This savings feature is the most popular with people of all ages. Automatic deduction from your paycheck is a comfortable way to save and grow wealth.
Make the maximum 401K contribution that you can. Your employer can tell you when you can start and what your specific 401K contribution limits are.

Your 401K contribution limits increase every year. Although in tough economic times like this it is hard to save, the 401K plan , which is provided by your employer can be a great tool to help you not only save money for the future but provide tax savings in the present. Because you contribute with money taken out of your paycheck you are taxed on a lesser amount and thus have lower taxes than if you were paying for a retirement plan outside of the 401K plan.

The 401k contribution increases every year. In 2010, you will be able to contribute the maximum of $16,500 for individuals under age 50 and for those that are over 50, an additional $5,500 to the maximum of $22,000. This limit applies to 401K and Roth 401K plans.

Why contribute when you have to lock up your money for so long? Just the idea that you are contributing with pre-tax dollars is a huge benefit. In addition, all the investment income earned inside a 401K is tax deferred which means that you don’t have to pay taxes on the money until it is withdrawn. That is another huge benefit.

Between those two it is hard for any other investment to compare- unless of course, you were willing to take a lot of risk to make up for all the tax advantages you would lose with an investment in a 401K plan. When you make contributions to your 401K it is like the government is helping you pay for a part of your retirement plan.

Because your 401k contributions are automatically taken out of your paycheck, it is much easier to save than any other plan. Most people don’t miss the money. Your account will grow much faster because the earnings are tax deferred than any other taxable plan. You can feel secure that you have funds working for you over your work life so that you can supplement your social security with additional income.

Make contributing the maximum into your 401K plan a habit. Your contributions today can secure a better financial future for when you decide to stop working.