How to Increase 401k Savings
Your move upward on the corporate ladder means that you will have additional income to save for retirement. Many professionals believe that they are locked into a certain deferral level as regards their 401k account. You should investigate ways to increase employer-sponsored 401k savings as you become more affluent.
Things You’ll Need
- Prospectus for 401k plan
- Wage deferral form
6 Steps to Increase 401k Savings
1. Maximize your employer’s matching funds in order to increase your 401k savings.
Your employer will likely offer a certain number of cents for each dollar up to a stated percentage of employee deferral. Contribute the maximum percentage in order to gain the full benefit of company 401k matches.
2. Avoid IRS penalties during tax season by sticking to the maximum contribution level for 401k accounts.
You can avoid hundreds of dollars in tax penalties by keeping your annual 401k contributions below $15,500.
3. Send your company’s annual bonus and stock options back into your 401k savings.
This option is ideal for employees who have a relatively low contribution level throughout the year and want to submit their annual bonuses to the 401k to prevent additional taxation.
4. Switch your 401k provider if you notice a higher performing provider offered by your employer.
Your company is required to provide competitive 401k options and you are permitted to roll over funds from one account into another to maximize your savings.
5. Increase the deferred amount in each paycheck as you begin to gain profit sharing and other additions to your income.
You can adjust your contribution amount with a form offered by your employer any time you receive a raise or other financial incentive.
6. Examine your 401k account online on a regular basis to ensure your retirement savings are sufficient.
Managing companies will update investors on the growth of their account, including the performance of component stocks and mutual funds, on a regular basis. You should switch 401k accounts if you notice a steady decrease in your yields.