The 401k plan for you

A 401k is a great investment vehicle, but you’ll have to make some decisions, and that scares away a lot of people. Nevertheless don’t worry; I’ll make the decisions easy for you.
Your first key decision is whether to set up a 401k account at all, and if so, whether it should be a regular 401k or a Roth 401k. Then you must decide how much to invest, weighing the value of a 401k versus other good opportunities, such as paying down debt or building up an emergency fund.
You will have to make some investment decisions. That scares away a lot of people, but it’s not too hard. Don’t try to beat the market, just allocate your money among several choices. There are good sources if you search the investment industry’s buzzwords, “asset allocation.”
When you leave your current employer to go to work for someone else, you’ll have to decide what to do with you is old 401k. I recommend rolling over into an IRA, but you have to make sure that you do it right to avoid excess taxes.
You may consider taking out a loan from your 401k plan, or making a hardship withdrawal. I discourage these actions whenever possible, but sometimes it’s the best choice you have.
Death and divorce are two sad topics that should be considered when you set up your 401k. The law is often not what you expect regarding 401k plans, so pay attention here. Your 401k will go to your spouse unless he or she has signed a waiver. That’s true even if you’re separated from your spouse and hope you never see the loser again. If you go through a divorce, make sure that the final papers specify exactly what happens to the 401k.
When you retire, you’ll have some decisions to make about withdrawing your money. This is the fun time: spending! I like a rollover into an IRA; just be sure to get the details has done exactly right.
All these decisions scare some people, but it’s not too hard if you take it a step at a time. Relax. Beginning a 401k is a great start toward financial security.