retirement

401(k) fundamentals

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Rolling over your 401(k) plan
Unless your company has an outstanding 401(k) plan, you should consider taking the account with you if you leave the company. If you're going to another company, you may be able to roll it over into the new company's plan. If not, you can roll your 401(k) into an IRA at a brokerage. This gives you more control over your account and, in most cases, you'll have much better investment options at a brokerage.

Just make sure you follow the proper procedures. The plan sponsor or the human resources department will assist you in transferring the money. You don't want to accidentally cash out your retirement plan and get stuck paying taxes and penalties for early withdrawal.

Options for tiny businesses
If you're an entrepreneur trying to maximize your retirement savings, consider opening an individual 401(k). A 401(k) plan used to be only for someone who worked for a corporation, but no more. Owners of very small businesses can now open 401(k)s and shelter thousands of dollars more than they could have in other self-employment retirement accounts.

The plans, often called individual or solo 401(k)s, are available to businesses that have no other employees beyond an owner and a spouse, although some partnerships can qualify. That means sole proprietors, owners of mom-and-pop companies, even people who work for someone else but have a side business, can open one.

The important thing to remember is, make use of the retirement options available to you. If a 401(k) plan isn't offered at your place of employment, you can still save in other tax-favorable investments (such as IRAs). Explore your options, and put away 10 percent of your income (or as much as you can) for the future. This is called paying yourself first, and it's probably the smartest investment move you can make.

-- Updated: Jan. 4, 2008

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