Christmas music has already begun in some stores, which also means that it’s time to begin end-of-year planning. For many, this means looking at your 401(k), and so I thought I’d share some news and tips from a recent article.
Brightscope Inc., a retirement plan rating company, recently compiled a list of the 10 most commonly held mutual funds in 401(k)s. Generally, it hasn’t been a bad year for 401(k)s and investors. Nevertheless, many of the top ten underperformed the Standard and Poor’s 500 stock index. This may simply be a sign that size is not always conducive to the performance of a fund, since what would have once been healthy gains can no longer make the same improvements. The top ten clearly have had a good run, but now also is the time to take stock of where they are going and how you stand to benefit. It will take more initiative and knowledge, but you will want to look into new approaches and take note of the size, cost, and leadership to see if it fits your investment goals.
For that matter, and as I mentioned in a previous post, 2010 may be the year to consider a Roth IRA while there is a tax exemption in place until January 1st … and the new small business laws have removed the penalty for rolling funds over from a 401(k) to a Roth IRA. Not surprisingly, according to a recent Financial Advisor article, Bank of America has seen a huge jump in Roth conversions.
Tags: 401(k), retirement planning, Roth IRA, tax exemption, taxes