Got A 401(k)? See If It Offers These Special Perks

Got a 401(k)?

About one-third of all Americans do.

But you may not be aware that not all 401(k)s are created equal. People are often surprised to learn that many plans do not offer all the perks and benefits permitted under IRS rules.

That’s because employers are allowed to pick and choose the features they want to offer in their 401(k) plan. When it comes to the 401(k), they are definitely the boss.

The result? Some 401(k) plans earn an “A+” on the retirement scale, while others flunk the class.

We talked with financial writer Lucy Lazarony/MoneyTalksNews ‏for a Yahoo Finance article on 5 Hidden Features of 401(k) Plans That You Should Know About.

Features like a Roth 401(k) option can make the plan much more attractive, especially to younger workers looking for long-term growth (our firm offers employees a Roth 401(k) option and it’s invariably a popular choice with millennials).

Plans that allow workers to contribute the maximum amount under IRS guidelines are also highly ranked. (Other plans can cap contributions at levels well below the IRS limits.)

We’ve had clients enrolled in plans that allow “in service rollovers,” which are optional features permitting rollovers to an IRA account when you’re still employed. That may make sense when the 401(k) has high expenses or poor investment choices, and an IRA is a better option.

Looking for a 401(k) loan? Not all plans offer them. And when you finally retire, does your 401(k) allow you to take flexible withdrawals from your account, to suit your changing needs? Believe it or not, some 401(k) plans don’t allow that. They force you to take one-size-fits-all withdrawals according to your age and life expectancy. Don’t need that much? Too bad. Need more? Too bad, can’t do that either.

The Takeaway: 401(k) plans are a little like the ever-popular Swiss Army knife. They can come with a wide assortment of tools and gadgets, but every model has its own unique mix. While some 401(k) offerings are top-notch, others can be pretty abysmal. To decide whether your 401(k) is a good fit for you (especially when it’s time to lave your job), you need to take a closer look at what the 401(k) costs, what it invests in, and whether it offers enough of those special bells and whistles to support your retirement lifestyle.

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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