Get Your 401(k) Ready For 2011


Now's a good time to examine your 401(k) as the year ends and you get one year closer to retirement.

Scott Holsopple, the CEO of Smart401k, a firm that works with individuals and employers, offers these suggestions for anyone managing a 401(k):

  • Review your retirement accounts. How much have you saved so far?
  • Review your current retirement planning. Even though retirement could be a long way off, envisioning what you might like to do when you get there will help you decide how much you need to save.
  • Use one of's calculators to get an idea of where you stand. If you see yourself living in a mansion on the beach and you've only put away $50,000, the calculator can help you figure out your next step.
  • Increase contributions to your savings plan. About 10 percent to 15 percent per year is a good target. If you're not saving that much each month, add at least 1 percent of your paycheck to what you're saving currently. "That's an easy number," Holsopple says.
  • Review how you have your investments allocated. Getting some expert advice at this point is always a good idea. Holsopple recommends leaving at least some of your savings in cash as you approach the end of the year, so you have flexibility in the new year to rebalance again as necessary.
  • Update your beneficiary forms. Beneficiary forms override wills. If you don't update yours, your money might go to somebody you really don't want to have it. For example, your ex-husband.
  • Consider whether now is the right now to convert to a Roth 401(k). Both Barbara Whelehan and I have written about this topic. There are no absolutely right answers, but it's a good year to consider this issue. If you make the conversion this year, you can divvy up the taxes over three years -- 2010, 2011 and 2012.

After you've taken these important steps, pat yourself on the back. You're several steps ahead of most of the rest of the world.

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