Protect your 401(k) : 10 steps you must take to protect your retirement nest egg

A PAPERBACK ORIGINAL Straightforward facts for all workers looking to protect their company 401(k) assets in a post­Enron world From Enron on down, recent high-profile bankruptcies have awakened American workers to the vulnerability of their 401(k) plans and left millions wondering what they can do to protect themselves. Protect Your 401(k) hits this market with practical, accessible answers, explaining everything from what a 401(k) is to how to take full advantage of matching programs, assert control over investment policy, and more. In-depth enough to guide readers from starting a plan through taking distributions, yet plain-talking enough to be understood by all workers regardless of their backgrounds, Protect Your 401(k) covers: Simple steps every worker should take first How 401(k) plans work Advanced strategies for really putting a plan to work Warning signs of a 401(k) provider in trouble How to get your money out safely Copyright......Page 5 Contents......Page 7 Preface......Page 9 INTRODUCTION AMERICANS' NEW MOST VALUABLE ASSET!......Page 13 What About All the Recent Bad Publicity?......Page 14 So, Why Even Bother With a 401(k)?......Page 15 Learn 10 Steps to Take Immediately......Page 16 Why Should You Read This Book?......Page 19 CHAPTER 1 PAY YOURSELF FIRST......Page 21 Pay Yourself First......Page 22 The Budget......Page 24 When You “Find” More Money, Invest It!......Page 27 CHAPTER 2 NCREASE YOUR CONTRIBUTIONS......Page 28 Eligibility (Who Can Invest?)......Page 29 Elective Contributions of Pre-Tax Dollars......Page 30 Exponential Growth Through Compounding......Page 31 Dollar Cost Averaging......Page 32 Retirement Plan Contribution Options......Page 33 Sources of Contributions......Page 34 Not Just for Retirement......Page 35 Using Both a 401(k)and an IRA Makes Sense......Page 37 CHAPTER 3 TAKE FULL ADVANTAGE OF MATCHING CONTRIBUTIONS......Page 39 Read Your Plan’s Fine Print......Page 40 Company Stock and Your Job......Page 44 A Definition......Page 48 Definitions......Page 49 The Process......Page 50 Liquidation......Page 53 Legal Protection......Page 54 Checks and Balances......Page 55 How can you tell if your company has a good 401(k) plan?......Page 56 Warning Signs......Page 57 CHAPTER 5 BECOME AN INFORMED INVESTOR......Page 59 How Aggressive Do You Need to Be?......Page 61 What Is a Reasonable Growth Rate of Return?......Page 62 Luck Does Play into Investing......Page 69 CHAPTER 6 USE THE SIX CONCEPTS OF SUCCESSFUL INVESTING......Page 71 Concept One —Why Diversify?......Page 72 Concept Two —The Art of Asset Allocation......Page 75 Concept Three —Asset Class Investing......Page 77 Concept Four —Rebalancing......Page 80 What Happens if You Rebalance Using Different Techniques?......Page 81 Robin Hood......Page 82 Reverse Robin Hood......Page 83 How to Use These Results to Add Value......Page 84 Concept Five —The Power of Compounding......Page 85 Concept Six —The Perspective of Time......Page 87 Individual Stock Picking......Page 90 Timing the Stock Market......Page 91 Informed Investing......Page 92 CHAPTER 7 UNDERSTAND YOUR INVESTMENT VEHICLE CHOICES......Page 93 How Do You Compare?......Page 97 How Mutual Funds Work......Page 98 Growth......Page 100 Value......Page 101 Balanced Funds......Page 102 Fixed-Income Funds......Page 103 Understanding the Prospectus......Page 104 Other Things You Should Know......Page 106 How to Read Newspaper Mutual Fund Tables......Page 110 The Rating Game......Page 111 CHAPTER 8 BUILD A CORE INVESTMENT PORTFOLIO......Page 114 Building the Portfolio......Page 118 401(k) Calculator......Page 124 Consulting an Advisor......Page 125 The Financial Advisor Community......Page 128 Financial Planners......Page 129 Bank Investment Representatives......Page 131 Independent Fee-Only Financial Advisors......Page 132 How Do Advisors Get Paid?......Page 133 The Distribution Rules......Page 137 Tax-Free Rollovers......Page 138 Minimum Distributions......Page 142 Section 72(t) Distributions......Page 143 Leave Your Money in the Plan......Page 144 Loans......Page 145 Repayment......Page 147 Hardship Withdrawals......Page 149 Safe Harbor Tests Set Forth in the IRS Regulations......Page 150 Withdrawals of After-Tax Contributions......Page 151 Free Information......Page 152 CONCLUSION PULLING IT ALL TOGETHER......Page 153 APPENDIX A THE WORKING DOCUMENT: YOUR INVESTMENT POLICY STATEMENT......Page 156 There Are Seven Steps to Establishing an Investment Policy......Page 157 APPENDIX B THE HISTORY OF 401(k) PLANS......Page 163 Enter the ERISA......Page 164 Problems with Pension Funds......Page 165 Differentiating Investment Styles......Page 166 The Era of Personal Responsibility —40l(k)......Page 167 Fidelity......Page 168 The Bull Market and Risk......Page 169 It’s All Up to You......Page 170 APPENDIX C GLOSSARY OF TERMS......Page 172 INDEX......Page 185 ABOUT THE AUTHORS......Page 194

The Essential Book for Anyone Who Has a 401(k)­­and Wants to Keep It!

If you are like millions of American workers, your work-related 401(k) has grown to become a major component of your overall financial future, second only to your home. Yet while you wouldn't consider leaving your house uninsured, have you left your 401(k) to fend for itself against Enron-type corporate disasters and other unforeseen events that could destroy its value­­and devastate your retirement security?

Protect Your 401(k) is the first book to provide you with specific, nuts-and-bolts steps you can take to protect your 401(k) as you maximize its growth. Packed with essential information and basic do's and don'ts for every American with a 401(k), this no-nonsense book features:

• 10 steps you should take immediately to safeguard your 401(k) assets
• 6 core investment concepts for dramatically improving the growth of your 401(k)
• Guidelines for implementing a strategy designed to protect you in both up and down markets

Because your 401(k) belongs to you, it is your responsibility to watch over it. Protect Your 401(k) provides you with practical, sensible strategies for taking care of your 401(k) today, so that it can take care of you tomorrow.

If you are like millions of American workers, your work-related 401(k) has grown to become a major component of your overall financial future, second only to your home. Yet while you wouldn't consider leaving your house uninsured, have you left your 401(k) to fend for itself against Enrontype corporate disasters and other unforeseen events that could destroy its value -- and devastate your retirement security? Protect Your 401(k) is the first book to provide you with specific, nuts-and-bolts steps you can take to protect your 401(k) as you maximize its growth. Because your 401(k) belongs to you, it is your responsibility to watch over it. Protect Your 401(k) provides you with practical, sensible strategies for taking care of your 401(k) today, so that it can take care of you tomorrow.