401K's Are they in TROUBLE NOW???

southern yankee · Post by **southern yankee** » Sun Oct 05, 2008 11:54 am

with passing of this BAILOUT. Does anyone have a opinion on what 401k members should do?? If anything at all??

Lon · Post by **Lon** » Sun Oct 05, 2008 12:05 pm

southern yankee;1009363 wrote: with passing of this BAILOUT. Does anyone have a opinion on what 401k members should do?? If anything at all??

Depends on your age-----------If you have more than 10 years to go for retirement, keep the 401 K and keep contributing. IN NO CASE SHOULD YOU CASH OUT. That would be like jumping off a roller coaster. Those closer to retirement may want to adjust their accounts more towards bonds and less into stocks.

Accountable · Post by **Accountable** » Sun Oct 05, 2008 12:56 pm

southern yankee;1009363 wrote: with passing of this BAILOUT. Does anyone have a opinion on what 401k members should do?? If anything at all??
I'm not eligible for a 401K but I am eligible for a 403B (same thing). My beloved and I are going to start contributing to it ASAP. I recommend you stay in, as Lon says. If you have employer matching, contribute the maximum they'll match if you can afford it. That's instant profit!

We've sold almost all our investments and are in cash or money market now almost exclusively, but we're definitely not cashing in our ROTH IRAs.

CARLA · Post by **CARLA** » Sun Oct 05, 2008 1:56 pm

Stay the course with your 401K leave it alone.

Accountable · Post by **Accountable** » Sun Oct 05, 2008 2:35 pm

JAB;1009574 wrote: Unfortunately, some folks where I work are increasingly turning to their 401k to secure loans for themselves. That wouldn't be so bad except that they are now tempted to take an out and out distribution knowing full well the cost and the risk for their future.
Borrowing from a 401K is dumb.

Money that goes into a 401K is pre-tax dollars

One must repay the loan with dollars one has paid income taxes on. That's a minimum 15% hike on top of whatever rate one is paying on the loan.

One must pay taxes when taking a distribution later, which means the money one repaid the loan with is taxed twice!

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Mon Oct 06, 2008 4:50 am

southern yankee;1009363 wrote: with passing of this BAILOUT. Does anyone have a opinion on what 401k members should do?? If anything at all??

I operate two 401(k) plans with over $2 billion in assets. What people should do is keep saving, not make withdrawals or loans and stop looking at their account every day. And, they should make sure they are well diversified and if available they take advantage of any automatic re balancing option that may be in the plan so that they remain diversified according to a pre-planned allocation.

If a person is in or close to retirement, let's hope they have already moved to a conservative investment mix with a large dose of fixed income, or that they can hold their financial breath for about five years...or more. Taking money out of a plan now will only mean that the accumulated balance will last far less than planned when earnings would have offset most if not all of the withdrawals.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Mon Oct 06, 2008 4:52 am

Accountable;1009435 wrote: I'm not eligible for a 401K but I am eligible for a 403B (same thing). My beloved and I are going to start contributing to it ASAP. I recommend you stay in, as Lon says. If you have employer matching, contribute the maximum they'll match if you can afford it. That's instant profit!

We've sold almost all our investments and are in cash or money market now almost exclusively, but we're definitely not cashing in our ROTH IRAs.

Going to start contributing? I hope you just became eligible.

Accountable · Post by **Accountable** » Mon Oct 06, 2008 5:01 am

QUINNSCOMMENTARY;1010005 wrote: Going to start contributing? I hope you just became eligible.

There's no matching so there was no rush to get in. Since last year was a probationary period (new career) we decided to wait.