401(k) and 403(b) Investing Web Sites
Employees of companies both large and small have seen the traditional pension plan gradually replaced by 401(k) and 403(b) retirement plans. Traditional pension plans promise employees a specific amount in retirement based on years of service and salary. In contrast, 401(k)s (offered by for-profit companies) and 403(b)s (offered by nonprofit organizations) are contributory plans in which a certain amount is set aside each year in a tax-deferred account, and the amount an employee receives in retirement is based on the size of the contributions as well as the investment performance of the account.
The switch from defined-benefit plans to defined-contribution plans shifts the decisions about the amount to contribute and how to invest from the employer to the employee.
Where can you turn to find out what you need to know to make the most of your retirement plan? When youve exhausted the information provided by your employer, the following Web sites can fill in your knowledge gaps.
NASD's Smart 401(k) Investing
Among other useful investment and stock market information, the NASD's Web site powers a page devoted to 401(k) investing. Users can access this portion of the site by choosing the "Investor Information" tab, then the "Investment Choices" section, and finally Smart 401(k) Investing under the "Retirement Accounts" heading.
Smart 401(k) Investing takes investors through the process of enrolling in and managing a 401(k) or 403(b) account and provides answers to questions ranging from eligibility to rules and regulations. Access to this site is free.
This Fidelity-sponsored site offers information on 401(k) plans for both customers and non-customers. The site provides pricing and performance statistics on Fidelity mutual funds as well as funds offered by other companies. FAQs and basic information on 401(k) plans are offered. An investment dictionary and a set of tools and calculators assist investors in evaluating their 401(k) investment decisions. Most of this site is free to non-Fidelity customers.
401khelpcenter.com offers information for plan sponsors, retirement professionals, small businesses and plan participants. In the section of the site devoted to plan participants, popular 401(k) topics include: inheriting a 401(k), how debt impacts savings and handling plan distributions. The "Critical Issues" section offers a multitude of articles on issues such as early withdrawal penalties, taking loans from retirement accounts, how to handle a bear market and leaving assets in a company's plan after quitting. On-line calculators and tools can assist investors in figuring out how much they need to retire, rates of return they need to earn, how much to save each month and what their current plan's yield is. Tips on when to take and not take loans and hardship withdrawals are found on the site as well as links to other Web sites that offer advice on 401(k) plans and Social Security benefits. Access to the site is free.
Changing jobs can raise many questions about what to do with an existing 401(k) or 403(b) account. This site offers vendor-neutral information that can guide investors through the rollover process. The home page provides quick links to contribution limits, a 401(k) checklist and common mistakes made when rolling over. Access to this site is free.
Beginning in 2006, 401(k) plans are permitted to allow employees to designate their contributions as Roth contributions (taxes are paid on the contributions but no taxes are due for withdrawals). These contributions will be subject to the same rules as Roth IRAs, which means the contributions must remain in the plan for five years to receive the tax advantages. Roth401k.com is a site devoted to this unique investment opportunity. Articles and recent news stories regarding the Roth 401(k) are archived with titles and descriptions. This site is free, but some article links are to paid sites and can only be viewed by subscribers to the host site.
U.S. Department of Labor/Employee Benefits Security Administration
The Department of Labor is responsible for administering and enforcing the federal provisions governing private sector pension plans. As part of its responsibilities, the agency provides consumer information on pension and 401(k) plans, including your rights as a plan participant, plan disclosure requirements, protecting your pension, what happens if your employer goes bankrupt, and similar issues.