September 29, 2013 (CHICAGO) --Whether you're just starting out on your professional path or you're just around the corner from retiring, a 401(k) might be your best retirement-funding option.
As with any financial option, the more you know, the better! Joan Jensen, president and CEO of Central Credit Union of Illinois came into our ABC7 studio with tips to avoid common mistakes when it comes to retirement plans.Joan's Tips: Common 401(k) Mistakes to Avoid
1. Get started
Money Is Invested Pretax
"Pay Yourself First"
Employer Offers Plan?
2. Free Money
Contribute For Max. Matching
2013: $17,500 For Individuals
50+: Contribute an additional $5,500 "Catch-Up"
3. Company Stock
If your company gives you stock, take it, but sell it as soon as you are legally allowed to do so.
If your company does great, you might regret not having loaded up on its stock, but not as much as you will regret losing your life savings along with your job if the company folds.
4. Don't Use To Pay Off Debts
Money Pulled Doesn't Compound & Grow Tax-Deferred
Pay Back Amount Borrowed, But Can't Make Up For Lost Gains
If You Leave The Company: Typically Have To Repay Loan Immediately
5. Don't Cash Out
Leave In Plan
Roll Over To IRA or New Plan