Occasionally, I offer information on this blog outside of the topic of disability area that I think may be helpful. A large part of our practice involves ERISA, the Employee Retirement Income Security Act of 1974. ERISA is the federal law that regulates your employee benefits if you work (or worked) for a private (non-government or church) employer. We have many clients that come to us with pension and 401k issues. Recently, Forbes.com offered a very interesting article on key mistakes that employees make with their 401k plans.
Forbes’ contributor, Michael Chamberlain, offers the following list of mistakes that people often make in relation to the 401k offered by their employer:
- Not participating in the plan at all.
- Failing to contribute adequate percentages to get the company match.
- Not understanding how much needs to be contributed to have the desired retirement income.
- If the participant does understand how much should be contributed, failing to put that level into the plan.
- Not understanding the level of risk in the investments selected.
- Taking too much risk or too little risk with the investments.
- Thinking that the “education” provided by the financial services company associated with the plan is investment advice.
- Believing that if one target date fund is good, thinking that investing in two or more would be better.
- Not understanding the costs of the 401(k).
- Putting too much into company stock.
- Borrowing from the 401(k).
- Cashing out the plan when changing jobs.
- Rolling over the 401(k) at retirement into an IRA with a broker-dealer who takes large commissions out of the account on the sale of new investments.
Chamblerlain also points out key mistakes that sponsors (the ERISA term for employers and unions) make that cause problems for 401k plans and their participants.
All in all, it is a short read, but well worth it if you participate in a 401k, have a family member that participates in a 401k or you may be eligible to participate in a 401k.
If you need assistance with an ERISA claim, including pension and 401k problems, please call Florida ERISA Attorney John Tucker at (866) 282-5260.