Oct 30

Tips to Retire Early

With so many older people unable to retire, it’s more important than ever to prepare yourself for your own retirement.  You don’t want to be 70 years old and still working, do you?  Pensions are a thing of the past and future Social Security benefits are in limbo, it’s up to you to take command of your retirement savings.  Here are a few things to consider so you can retire when you want.

The first key is diversification.  It’s not only a great strategy for the stock market, it’s great for your retirement plan as well.  You should be invested across different asset classes and indexes as well as well as among stocks, bonds, real estate, etc.  A balanced portfolio is a good portfolio.  Avoid taking too much notice in the ups and downs of the market; over the long haul, they will give you good returns.

Invest early so you can retire earlyMoreover, you should diversify the plans you contribute to.  Having both a traditional 401(k) and a Roth IRA provides you with more balance.  You see an immediate tax break when contributing to the 401(k) along with tax-deferred savings.  With a Roth IRA, you don’t get the tax-break but withdrawals (inc. earnings) during retirement are tax-free.

It seems obvious, but the earlier you start saving, the better off you will be.  An important thing to remember is the Rule of 72.  You take the interest rate you think your investments will earn and divide that number into 72 and the resulting number is the years that your money will double.  Therefore, if your money earns 7.2% it will double in ten years.  If you put $5,000 in at age 25, in 40 years it will multiply by 16 giving you $80,000 (inflation not withstanding).  Ten years after that, you’ll have $160,000.  If you wait to contribute, you’re basically halving your retirement savings every decade.

Next, pay attention to the benefits your employer offers.  We talk about the employer match all the time.  Make sure you contribute enough to your 401(k) to receive the full match.  If not, you’re throwing away free money.  Also, take advantage of any services offered by the plan such as financial planning and online tools to better manage your money.

Don’t forget to have a plan and figure out how much you’ll need to retire with.  People are living longer so they need more money when they retire.  You need to find a number that you can live off comfortably.  You don’t want to outlive your savings.  Further, don’t rely on Social Security.  As said, who knows what will be left when you retire plus you will only get the full benefits if you wait longer to retire.

Lastly, let your business acumen or special expertise help you save more.  There are plenty of alternate investments that is permitted by the IRS.  These include investing in a small business, buying real estate, purchasing precious metals, etc.  A self-directed IRA will help invest in these and so much more.  If you are self employed, look into a Solo 401(k) plan to save for the future.

The tax experts at the IRA Financial Group specialize in individual and small business retirement plans.  Contact them at 800.472.0646 to figure out the best plan for you to retire when you want to.  Be sure to like us on Facebook and follow us on Twitter too!

Oct 28

Solo 401(k) Plan Surpassing SEP IRA As Retirement Plan of Choice for the Self-Employed

Over 80% of CPAs and tax professionals surveyed choosing the Solo 401(k) Plan vs. the SEP IRA as the retirement plan of choice for the self-employed

IRA Financial Group, the leading provider of self-directed solo 401(k) Plans announces the finding of its survey showing the over 80% of accountants and CPAs that were interviewed considered the Solo 401k Plan a more attractive retirement plan option for the self-employed or small business owner than the SEP IRA. IRA Financial Group surveyed over 50 accountants, CPAs, and tax professionals throughout the United States and asked them which retirement plan they have been recommending to their self-employed clients between the solo 401k plan and the SEP IRA. “The survey results showed that the popularity of the solo 401(k) Plan is now starting to become mainstream in the accounting world, “ stated Adam Bergman, a tax attorney with the IRA Financial Group.

Solo 401(k) Plan Surpassing SEP IRA As Retirement Plan of Choice for the Self-EmployedAccording to Mr. Bergman, just five years ago the majority of CPAs and the tax professionals were recommending the SEP IRA over the solo 401(k) Plan as the best retirement plan for the self-employed or small business owner with no full-time employees. “It has taken time, but CPAs and tax professionals throughout the United States are starting to embrace the significant benefits of the solo 401(k) Plan vs. the SEP IRA for self-employed individuals from a retirement, tax, and investment perspective, “ stated Mr. Bergman.

A solo 401(k) plan” is an IRS approved retirement plan, which is suited for business owners who do not have any employees, other than themselves and perhaps their spouse. The “one-participant 401(k) plan” or individual 401(k) Plan is not a new type of plan. It is a traditional 401k plan covering only one employee.

One of the main advantages of a solo 401(k) Plan vs. a SEP IRA is that an individual can reach his or her maximum annual contributions quicker. A solo 401(k) Plan includes both an employee and profit sharing contribution option, whereas, a SEP IRA is purely a profit sharing plan. Under the 2013 new solo 401(k) contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $17,500. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $51,000, an increase of $1,000 from 2012.

For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $23,000. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $56,500, an increase of $1,000 from 2012.
Whereas, a SEP IRA would only allows for a profit sharing contribution. Hence, a participant in a SEP IRA would be limited to 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum of $51,000 for 2013. No employee deferral exists for a SEP IRA.

In addition, with a solo 401(k) Plan, a plan participant can borrow $50,000 or 50% of his or her plan account value, whatever is less. A loan is not available with a SEP IRA. “The loan feature is a popular feature that many CPAs and accountants mentioned as a reason why the solo 401(k) Plan is a better plan than the SEP IRA for the self-employed, “ stated. Mr. Bergman.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP and Dewey & LeBoeuf LLP.

IRA Financial Group is the market’s leading “Checkbook Control” Self Directed IRA and solo 401k Plan Facilitator. We have helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate tax-free and without custodian consent!

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Oct 24

Things to Check During 401k Open Enrollment

It’s fall, so that means it’s time for open enrollment at most companies.  This is a great time for a 401(k) checkup.  If you’re not already contributing to your retirement plan, now is the time to start.  If you are, here is the perfect opportunity to make sure you’re on track with your goals.  Here is a few things you can look at in regards to your 401(k).

Check your contribution level.  Generally, this is the percentage that is taken from your paycheck and invested in your 401(k) plan.  If you were auto-enrolled into the program, this percentage is going to be fairly low, 3-4%.  At the very least, you want that up over 10%.  The more you save now, the better off you’ll be when you near retirement.

It's open enrollment time for your 401(k)Next, make sure you’re on track to receive your employer’s full match, if available.  A typical match is 50% of your contributions up to 6% of your earned income for the year.  If you’re contributing less than 6%, you’re missing out on free money.  Up your contribution so you at least receive your employer’s full match.

Have you recently turned 50?  You are allowed to contribute an extra $5,500 to your 401(k) for this year (and probably the same amount next year).  This “catch-up” contribution is especially helpful if you’re lagging in your retirement savings.

Around this time last year, the Department of Labor started requiring plans to disclose the fees associated with the plan.  Check this year’s fee disclosure reports to make sure your savings are not being eaten up by fees.  If you notice unusually large fees, bring it up to your HR department to see if there are better options out there.

Also, this is a good time to check your beneficiary designations.  Have you gone through a life changing event, such as marriage, divorce or childbirth?  You might want to change or add a beneficiary to your plan.  In the case of your death, you want your 401(k) to go to the right person(s).

Lastly, check to see if your plan offers a Roth option.  This allows you to contribute after-tax money to the plan.  In lieu of an immediate tax-break, you will get tax-free distributions (including earnings) during retirement.  This is especially helpful if you think you’ll be paying higher taxes later on in life.

These are a few things you should be checking at least annually.  Moreover, if you are self-employed (or have self-employment income) you can check in to opening a Solo 401(k).  They offer different advantages to workplace retirement plans.  Contact the 401(k) experts at the IRA Financial Group for more information @ 800.472.0646.

Oct 21

Mistakes People Make With Their 401k Plan

If your employer offers a retirement plan (usually a 401(k)), you should be taking full advantage of it.  He or she has probably done his or her due diligence to get you the best plan and the best advice to manage your account.  However, if you’re not being proactive when it comes to your savings, you’re probably not getting all you can from the plan.

Obviously, the biggest mistake you can make is not contributing to the plan.  Putting it off each year because you’re “too young” to worry about retirement is a fatal mistake.  The sooner you start saving, the more time you’re money has to grow.  The more time it has to grow, the more you will have come retirement and the sooner you can actually quit the workforce.  Plus, you’ll receive an immediate tax break and if your employer offers a matching contribution, you’ll get free money!

Avoid mistakes with your 401(k) planAside from not saving anything, the next biggest mistake is not saving enough.  If you were auto-enrolled in the 401(k) plan, you’re probably only deferring 3% of your income.  That’s not nearly enough to retire on comfortably.  At the very least, you should be saving 10% of your salary.  Since it’s taken out before you receive your paycheck, you’ll hardly notice it’s gone.  Make a budget and stick to it.

As I alluded to earlier, a potential employer match is huge.  If you’re not contributing enough to receive the full match, you’re throwing away free money.  These matches vary from company to company, but you’ll usually find a version of one of these two examples:  First, is the 100% match up to 3% of your yearly salary.  Your employer will match your contributions dollar for dollar until you reach 3% of your earned income on the year.  If you make $40,000, that number would be $1,200.  The second option is a 50% match up to 6% of you salary.  In this example, your employer contributes fifty cents to every dollar you contribute up to 6% of your earned income.  Again, if you earned $40,000, the full match is $2,400, but you have to contribute twice that, $4,800, to receive the whole thing.

Two things you should never do is ignore your 401(k) and obsess over it.  Contributing to the plan is just the beginning.  You need to pay attention to the account for various reasons.  Check that your asset allocation is where you want it to be.  The markets fluctuate and so does your allocation.  Make sure you’re not taking on too much (or too little) risk.  See how your investments are performing and act accordingly.  Also note if there are new investment opportunities in the plan.  Conversely, don’t become obsessed with the plan.  Most people don’t have the time and financial know-how to manage his or her 401(k) on a daily basis.  Retirement saving is a long-term goal and you shouldn’t get caught up in the daily, weekly or even monthly swings in the account.  Work with a financial adviser to set up a plan and stick with it.

Last, but certainly not least, is forgetting about the account when you leave a job.  Over the course of your lifetime, you’re going to have several jobs with several 401(k) plans.  When you leave a job, take your 401(k) account with you!  It’s best to either roll it over into your new employer’s plan or to put it into a personal IRA.  The worst thing you can do is cash out the plan.  You’ll owe the taxes right away and face stiff penalties for early withdrawals if you are not yet age 59 1/2.

Even the smallest mistakes can cause huge grief when planning for retirement.  The tax experts at the IRA Financial Group specialize in individual and small business retirement planning.  Contact them @ 800.472.0646 to see how to better prepare for your own retirement.  Be sure to follow us on Twitter and like us on Facebook!

Oct 18

New Business Financing Alternative to the Rollover Business Start-Up (ROBS) Solution for Entrepreneurs

401(k) Plan financing strategy to allow entrepreneurs to access retirement funds tax-free and use funds for business acquisition purposes

IRA Financial Group, the leading provider of self-directed retirement solutions, including the Solo 401(k) plan, announces the introduction of a new business acquisition financing solution for retirement investors looking to use retirement funds in an active business. The new 401(k) plan financing solution involves taking advantage of the IRS approved plan loan feature. A 401k loan is permitted at any time using the accumulated balance of the solo 401k as collateral for the loan. A Solo 401k participant can borrow up to either $50,000 or 50% of their account value – whichever is less. This loan has to be repaid over an amortization schedule of 5 years or less with payment frequency no less than quarterly. The interest rate must be set at a reasonable rate of interest – generally interpreted as prime rate as per the Wall Street Journal. As of 10/04/13, the Wall Street Journal prime rate is 3.25%, which means participant loans may be set at very reasonable Interest rate. The Interest rate is fixed based on the prime rate at the time of the loan application. The 401(k) plan loan feature has proved to have been a valuable financing tool for many entrepreneurs looking to use retirement funds to fund or finance a business,” stated Adam Bergman, a tax attorney with the IRA Financial Group.

IRA Financial Group Introduces New Business Financing Alternative to the Rollover Business Start-Up (ROBS) Solution for EntrepreneursAccording to Mr. Bergman, as a result of the complexities and costs involved in the Rollover Business Start-Up (ROBS) structure, many entrepreneurs looking to finance or fund a new a or existing business have turned to the 401(k) Plan loan feature as an alternative to the ROBS solution. The Solo 401k loan financing option is a perfect for an entrepreneur or small business owner who needs less than $50,000 for a new or existing business. “With IRA Financial Group’s Solo 401(k) plan loan financing option, plan participants can borrow up to either $50,000 or 50% of their account value – whichever is less to help finance or operate a new or existing business,” stated Mr. Bergman.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading provider of “checkbook control” retirement solutions. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Oct 16

Avoid Retirement Myths

There are so many retirement myths floating around there that it’s time to debunk them, especially for younger savers.  Most groups of people are actually doing better when it comes to saving for retirement, however, Millennials are a group that’s lagging, both with saving for the future and taking charge of their finances right now.  Here are some common myths out there and why they’re not facts.

The most common myth out there is that retirement saving is only for older people.  In this instant gratification world we live in, many young people don’t plan for next week, let alone forty years from now.  This could be the biggest mistake any young person makes.  They need to realize that the earlier you start saving for retirement, the more earning power you’re money will have and the harder it will work for you.  How would a 40-something feel if you told him or her that they could go back in time and start saving when he or she was still a teenager?

Start saving for retirement as soon as you start earning moneyNext, is the group of people who were auto-enrolled in a work-place 401(k) plan.  While it’s a lot better than not saving at all, it’s not nearly enough to retire when and how you want.  Default enrollment comes with paltry savings.  Typically, the default percentage is only 3%.  Most experts agree that you should be putting aside 12-15% of your paycheck towards retirement.  Further, if your employer offers a match (the average is about 6%), you are leaving free money on the table every year!

Then, there’s the case of student debt.  No one wants debt, but student loans have relatively cheap interest rates.  Further, the first $2,500 of interest paid on the loan is tax deductible for many people.  Instead of hurrying to pay off the debt, invest in your 401(k) which will probably see higher returns than the money saved on interest paid on the debt.  Note that if you have credit card or other high interest debt, it’s best to pay those down first.

Next, are those that want to save for emergencies or something bigger, like a house.  So instead of saving for retirement, they put the money in a savings account which will not help your nest egg grow.  The alternative (saving for retirement and an emergency etc.) is that you can fund a Roth IRA.  The money you contribute to a Roth IRA can be withdrawn at anytime and for any reason tax- and penalty-free.  Also, for certain situations (first home purchase, higher education, among others) you are allowed to withdraw $10,000 of your earnings penalty-free.  Since Roth plans are funded with after-tax dollars, withdrawals during retirement are completely tax-free.

Do you think investing is too complicated for you?  Decades ago, this might have been true, but with all the technology out there, along with financial advisers, it’s not as hard as you think.  If you want to manage your finances yourself, there are a lot of online tools to help you and plans designed for you.  If you’re not comfortable with that, you can contact a professional to help manage your accounts for a small fee.

These are just a few of the fallacies out there when it comes to saving for retirement for younger people.  The sooner you start saving, the sooner you can retire (sounds good doesn’t it?).  Unless you love your job, it’s your goal to retire as soon as possible.  The only way you can do that is to start now!  The tax experts at the IRA Financial Group can work with you to put you on track to retire when you want.  Give them a call at 800.472.0646 today!

Oct 14

Judging Your 401k Plan

Since 401k plans are one of the main sources for Americans’ retirement savings, it’s a good idea to see how it stacks up.  This article lists four factors you should consider when stacking up your plan with others.  If it doesn’t stack up, look to make changes in your planning.

First off, you should have two or three funds from the major asset classes represented.  Mutual funds are classified into different asset classes or the types of investments it holds, such as large company, tech stocks or bonds.  When investing in these types of funds, it not only diversifies your holdings, but also keeps risk to a comfortable level.  Your plan should include funds in small- and mid-cap stocks, large-cap stocks, international stocks and bonds.

Compare your 401(k) plan to others to see how it stacks upNext, your plan should also include high quality mutual funds.  These funds should have a consistent manager (or team of managers) who have managed the fund for a number of years.  The fund should perform well compared to similar funds both during upswings and downswings in the markets.  Lastly, the funds’ investments should all follow along with the fund’s mandate or purpose.

The plan should offer advice specific to you.  Every individual’s retirement needs and goals are specific to him or herself.  Every advisor should each individual’s unique situation to make a plan.  He or she should also be able to tell each participant how much he or she will need to retire with.  Having a trusted advisor is crucial to stay on target for retirement.

Finally, fees, fees, fees!  While you might not have the lowest plan fees around, they should be in line with what others pay.  Brightscope.com can be used to compare other plans within your company’s size and asset bases.

If your plan doesn’t stack up, speak with your HR department.  You might not always get what you want, after all, you’re just one person in the plan, but if enough people inquire, change may come.  Check out the linked article for some questions you can ask to get the ball rolling.

If you can’t get anywhere in regards to your current plan, there are alternatives to retirement saving.  The tax experts at the IRA Financial Group are here to figure out the best course of action for you to take in regards to your future.  Contact them at 800.472.0646 or visit their website today!

Oct 12

Retirees Use Nest Eggs For Business Start-Ups

Here’s an article from fa-mag.com featuring our own Adam Bergman talking about financing new businesses using your retirement funds:

Use your retiremnt funds to start your own business

A lack of jobs in today’s economy is prompting more people to use their retirement money to start small businesses, according to Adam Bergman, a lawyer and tax expert.

Although it can be a risky proposition, it is one way 401(k) and IRA funds can be used to provide employment for a person who is retired or nearing retirement and for some of their family members, says Bergman, a senior tax attorney with IRA Financial Group LLC in New York City and Miami.

“A lot of people are cash poor but retirement rich, so this is a way to use those retirement funds if they have to,” he says.

The IRS allows 401(k) or IRA funds to be rolled over to a new 401(k) account that can be used start a business or buy a franchise. The money is used to buy qualifying employer securities in the new C Corporation that is set up, Bergman explains.

The owner of the fund is allowed to be actively involved in the business, earn a salary from it and guarantee a business loan. It can also be a way to provide jobs for family members who want to work in a family-owned business, Bergman says.

More people are using the tactic either because they are bored with retirement or cannot find suitable jobs, he says. The strategy, known as a rollover business start-up, or ROBS, does not have the same restrictions as a self-directed IRA when used for a business start-up. Using a self-directed IRA, the account owner cannot take an active role in the business, earn a salary from it or guarantee a business loan.

There are advantages and disadvantages to using a ROBS strategy, says Bergman.

With a ROBS strategy, up to the full amount of the 401(k) can be used for the business without paying taxes on the funds at that time and without paying any withdrawal penalty.

Starting a business provides a way to create a job for the account holder if other job hunting measures have failed.

However, “not everyone has the background and the ability to run a business, so it can be risky,” he says.

An assessor has to be brought in to determine the value of the franchise or business. The tactic requires that a C Corporation be created, which is subject to more taxes than an S Corporation or an LLC, Bergman says.

An alternative that can help some people, and which is safer, is to take a loan from the existing 401(k) fund. The loan can be up to half the value of the 401(k) or $50,000, whichever is less. It has to be repaid within five years in at least quarterly payments.

“That is not a lot of money but it is enough money to help some people out and you are paying yourself back because it is a loan,” Bergman says.

The other alternative is to take a large disbursement from the 401(k), but then taxes and a 10 percent penalty have to be paid at the time of the disbursement.

“The number of people using ROBS is growing, but it is still not a common practice,” says Bergman. “Sometimes people feel like they do not have a choice. They need to use the money in their retirement account because they have no where else to turn, so they feel they might as well use it to start a business rather than just living off of it.”

For more info on how to use your retirement funds to start your own business, please contact one of the tax professionals at the IRA Financial Group @ 800.472.0646 or visit our website today!

Oct 09

Understanding & Allocating Your Investments

If you’re trying to manage your investments yourself, it’s good to assess your situation and financial goals.  It’s also best to have some you trust that you can contact to make sure you’re putting yourself in the best possible situation.  Here are a few tips to help you manage your investments.

First, you need to assess where you are currently at.  If you are investing in a workplace 401(k) or a personal IRA, you’re probably off to a good start towards retirement.  The younger you are, the more risks you can take.  While the market may be a risky investment day to day, over the long haul, stocks see the highest returns you’ll usually find.As you get older and near retirement, the less risk you should take since you don’t have the time to make up for large losses.  Also, you need to assess just how much you know about investing and stick to what you know.

Understanding your investments is key to your retirementNext, you need to know exactly what you are invested in right now.  Look at a recent statement to figure how much you have invested in stocks, bonds, cash, etc.  Figure how much time you want to devote to investing each week.  The more time you have, the more individual stocks you may have in your portfolio.  If you don’t have more than a couple of hours each week, stick to managed funds.

You can find dozens of trusted sites for market analysis.  You don’t need to pay for this information, just find a free site that you’re comfortable with.  You’ll want to look at earnings reports, press releases, SEC filings, cash flow statements, etc.  With tens of thousands of stocks available, set guidelines for those you look to invest in.

It’s time to strategize your investment plan.  A good start is to find mutual funds or exchange traded funds that you’re interested in.  With these, you don’t need to pick every single holding in your portfolio.  For example, if you’re interested and have knowledge in technology, look to focus on individual stocks there while diversifying your portfolio with funds over other sectors of the markets.

Make sure to re-assess your holdings periodically.  We’re not saying to check what each of your holdings are doing every week, but more to check your asset allocation.  Make sure your ratio of stocks versus bonds is where you want it to be.  Over time, this can change and make your portfolio riskier (or more conservative) than you want.

This can seem a bit daunting at first and you may give up before you even get started.  Talk with an expert first to see how to best invest your retirement savings.  Once you get the handle on the basics, you can use your knowledge to broaden your investments.  The tax professionals at the IRA Financial Group can help you get started on this endeavor.  Give them a call at 800.472.0646 or visit their website today!

Oct 07

Back to Basics – The Mutual Fund

In this Back to Basics article, we are going to discuss the mutual fund.  Investopedia defines it in part as “an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.”  The following will give you an idea of what it is and how it works and whether or not you should have them in your 401(k) plan.

Mutual funds offer a wide array of investmentsTo simplify the definition, a mutual fund is a big collection of investments.  If you choose to buy one, you are invested in all the investments the mutual fund owns.  TheSimpleDollar.com give a good example of a simple mutual fund.  Say you buy a fund made up of Verizon, AT&T and Sprint stocks.  This is known as a blue chip telecommunications mutual fund.  There’s a certain percentage of each stock in the fund.  You can then by a share of the stock and be invested in all three brands.  When the values of the stock go up, your shares will go up and vice versa.

This is a simple example of a mutual fund to give you an idea on how they work.  Many mutual funds are a lot more complex and can be made up of different types of investments such as bonds, real estate and precious metals.  The biggest advantage of owning mutual funds in your 401(k) is the diversity it gives you.  The more spread out your investments are, the lower the risk.  If you were invested in only a handful of stocks and one or more tanks, your savings will take a big hit.

Each type of mutual fund has it’s own philosophy on how it’s invested.  Some examples are those that invest in big company stocks, others that stick with technology stocks and those that invest in real estate in a certain demographic.  There’s usually a person or team of people that run the mutual fund who make decisions on what and when to by based on the fund’s philosophy.

The downside of mutual funds are the fees associated with them.  An average fund costs about 1% of the value of the fund per year, usually for the cost of running the fund.  Returns should be much higher than that so it’s usually worth it if you have the right fund.  The fee is usually taken as a value reduction of each of your shares (usually taken quarterly).

A special type of mutual fund is known as an index fund.  Fees are far less in index funds since they usually adhere to a few simple rules.  The rules can be as basic as owning a like percentage of a particular group of stocks.  The drawback is not having someone that evaluates the investments and simply follows the rules of the fund.

There are many choices in your retirement plan to invest in.  When you invest in a 401(k), it’s pretty easy to move your money around in the plan.  You may invest in one mutual fund at first and then decide later to move it to something else.  This is especially true when you are looking to be more aggressive or decide to be conservative later on in life.

For more info about mutual funds and anything 401(k) related, contact one of the tax professionals at the IRA Financial Group @ 800.472.0646 or visit their website today!