Retire Comfortably by Managing your Fidelity 401k

According to standard statistics, since Jan 1, 2011 more than 10000 people are reaching the age of 60 years every day. Also, this trend will continue till 2030. Out of those already retired people 35% totally depend on their Social Security Payments. At the end of 2013 the average balance of 401k has reached record high of $101,650. But it is still lesser than the low to high interval of $218,000 - $350,000 which is ideal for a 35 years old American. 

As more American are getting retired, spending rest of life happily and comfortably is not that much easy. So, I suggest you that you should manage your fidelity 401k efficiently to retire comfortably and live the post retirement life happily. Here I am providing you some important ways to manage your fidelity 401k.

1) Taking advantage of willingness of your employer to contribute to your 401k

This is most important option to invest in your retirement. Most of the employers contribute to their employees’ 401k. The policies of your organization for contribution to your 401k are so confusing. So, reach out to your human resource department to get information of all terms and conditions. Some organizations contribute by investing a fixed percentage of your contribution. But some don’t invest till you invest a fixed amount of contribution to your 401k. Also you should know for how long you are going to work for your employer for claiming the funds.

Most experts recommend that every employee must keep aside 15% of your income which include your employer’s matching fund for fidelity 401k. According to IRS rules you can contribute up to $17,500 in 2015. If your employer is investing 3% then you should contribute 12% to have complete 15% contribution to 401k. If your employer decided to match more, your contribution will be lesser.

2) Keep self discipline and don’t touch your 401k till retirement

If you touch your retirement savings for buying luxury items like world tour or HD TV then it may affect your fidelity 401k and for this you have pay extra fees as well as taxes. Along with this you will lose converted compound interest on your investment. So, keep patience and have self discipline. If you forget your 401k for few moments then it will gain more monetary returns after some years.

According to latest survey every 1 out of 5 persons borrow against their retirement 401k savings. But borrowing from 401k savings can be dangerous and it can hurt their income on large scale. In 2000 the percentage of people borrowing from 401k savings was 18.7% and in 2014 it was 22.5%.

3) Consider your 401k savings instead of high interest rate debt

This may contradict what we are discussed in the precious point. But this way can prove to be useful and affordable when you borrow money from a lender who charges high interest rates. If you are young person and overwhelmed by high interest credit card debt, in this case borrowing from 401k savings will be useful.

 Here, your required amount will came out from your fund and you will pay back to yourself. But you should consider this option only in the worst conditions. In some cases you can pay back your loan in 5 years and the rate of interest may be 1% only. After borrowing from your 401k savings you should calculate your repayment plan which is comfortable to you.

4) Roll your fund after switching your job

While investing in the fidelity 401k one you must keep information and changing trends of global market. You should roll you fund if you switch the job. The discontinuation of payment to 401k may cause lots of penalties. So, keep attention towards previous employer. As soon as he stops contributing, roll your fund over 401k at your new job.  Also contact your plan administrators for roll over rules of fund over fidelity 401k.

I you start a new job. Then take your 401k plan savings will be transferred directly from old employer to new employer 401k plan. This will help you by keeping your savings invested and the complications of tax will not arise. This will be done with the help of 1099-R form. Box 1 of this form will be consists of amount distributed and box 2 contains taxable amount. This will be zero on the case of zero tax. This will tell IRS that money was never in your hands and so taxes are applicable.

For skipping any taxes on your retirement saving. You must prefer to transfer the account from one plan manager to another by reporting it to the IRS with the help of 1099-R.

If you consider the survey of people contributing to 401k fidelity then a 30 year old person who starts saving and earns nearly 7% rate of interest on investment plus 3% annual increase in salary will have roughly $1.1 million at the age of 65 years when he will retire.

Auto Enrollment has proved to be one of the big factors in fidelity 401k market for its better growth. Some years before workers had to decide whether to join 401k or not. Also they have to complete the paperwork. But enrollment of 401k is very easy today because of automatic enrollment option. This is making a great difference. 

According to a special research, nearly 90% of total employees consider the 401k or similar plans are beneficial. Also 67% of them are ready to switch their employers of same type who are providing better retirement benefits and facilities.

If you are part of fidelity 401k plan then money is deducted from your paycheck and hence your taxable income will be lower and so tax will be less.

In order to create and access your fidelity 401k account you will require your social security number as well as your Fidelity Personal Identification Number (PIN). If you don’t have the PIN then you have to complete your PIN and then your online access will be accessible.

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