ACM’s 401(k) Review

ACM Wealth offers clients a variety of benefits as part of our financial planning services. One benefit that is often overlooked is our offer to review and advise you on your 401(k) plan that you have with your employer. Your retirement plan with your employer is an important asset as well as a primary retirement savings vehicle that should not be overlooked.  We have identified four areas that if overlooked could result in your 401(k) being a bust.  Your ACM wealth advisor is here to help you.

Monitoring Contributions

Our advisors will make sure you are contributing as much as you can to your retirement plan, keeping in mind your budgetary constraints. Maximizing your contributions to a tax-deferred account will allow your contributions to grow at a faster rate than if they were invested in a taxable account. In addition, most retirement plans offer an employer match. In order to receive the full match from your employer, you have to contribute that amount on an individual basis. For example, if your employer offers a 4% match, you would need to contribute AT LEAST 4% of your salary to receive the full 4% match. This is considered “free money” and should not be ignored.

To ROTH or Not to ROTH

Some 401(k) plans offer a ROTH provision within the plan, allowing employees to contribute after-tax dollars to their 401K account. These funds will be tax-free income when withdrawn after age 59 ½.  A ROTH option is not beneficial to everyone. Consult with your financial advisor before making this election.

Allocation and Investment Selection

We can provide assistance in ensuring you are allocating your funds to the proper investment options. Current plans are required by law to offer a wide variety of investment options to participants, and choosing the appropriate alternatives can be confusing. We will review your asset allocation within your 401(k) to ensure the investments you are making are a reflection of your time horizon, risk tolerance, financial goals, and consistent with your overall financial plan.

One investment option often offered by plan administrators is a Target Date Fund, which sounds like a good idea, but may conflict with your risk tolerance and investment approach. Understanding how these funds work, and if they are right for you, is another area we can be of assistance.

Carve-Out Options

Some plans offer active employees participating in a qualified plan like a 401(k), the opportunity to withdraw a portion of their plan’s account balance upon request, without having to demonstrate a specific financial need. These “in-service withdrawals”, or “carve-outs”, as they are referred to, are not part of every plan. You can ask your HR representative if there is such a feature in your current plan, and, if there is, this is an opportunity for you to escape a plan with high fees and inadequate investment choices and invest in a more diversified portfolio, using individual securities like your account at ACM.

Bottom line, your 401(k) is likely your major retirement investment vehicle, perhaps your only retirement vehicle, and it is important that you monitor your account and be proactive in managing the investments in your 401(k) to ensure it is consistent with your overall financial and retirement planning efforts. Please reach out to your ACM financial advisor for a review of your plan at least annually.

Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.