Married couples, committed couples, or uncommitted partners. Whatever the correct description of your relationship, you financially connected. And that connection may last well into retirement.
You have at least one or two company 401(k) accounts in your household. Have you ever sat down to review the plans together? It may make sense to find out the best and worst features of each company 401(k) plan menu.
The quality of company 401(k) mutual fund varies between plans. The best 401(k) mutual funds can fund a household investment management strategy.
It is not possible to combine household 401(k) accounts into a single company 401(k). But you can establish a household 401(k) investment management strategy.
Start by analyzing the annual fees and expense ratios of all default 401(k) mutual fund menu options. The company 401(k) menu with the best low-cost index mutual funds will have a real advantage here.
A benchmark mutual fund expense ratio is at or below .25% per year.
What about the SDBA (self-directed brokerage account) option? Find out if you have that 401(k) account option in one or both of your household 401(k)’s. If so, take advantage of it for sure.
The SDBA allows you to open a brokerage account. Inside of your company 401(k). The account expands your investment options. Provides access to lower-cost ETF’s (exchange trade funds).
The SDBA account can add a fiduciary investment advisor. To your 401(k) investment management team. This 401(k) advisor can help improve your 401(k) buy and sell decisions.
Next, find out if one or both of your household 401(k) plans offers a Roth 401(k) option. A Roth 401(k) funds with after-tax dollars. With a Roth IRA, your withdrawals in retirement will not be subject to any local, state, or federal taxes.
A conventional company 401(k) funds with pre-tax dollars and company-matching contributions. Withdrawals are subject to all applicable taxes.
Remember to contribute the 401(k) dollar amount necessary to receive company-matching contributions. Do not miss this “free money” for your retirement. For each household member.
Last, make sure to name the other household member as a 401(k) beneficiary. And name the other household member the other 401(k) beneficiary. You want to make sure your 401(k) monies go to your loved one in the event of your demise.
For more details, google, “401(k) beneficiary disasters.” Legal precedents exist of divorced spouses and stepchildren awarded 401(k) beneficiary compensation. Only because someone was lazy on their 401(k) beneficiary update.
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