Monday, September 21, 2015

TAG's 401(k) Plan

We are wrapping up the latest round of 401(k) enrollment meetings, also Vanguard's first mail campaign which has been a solid success. The current stats of the Guild's 401(k) Plan:

Total Plan Balance -- $229,742,426.16

Number of Participants -- 3,111

Average Participant Balance -- $87,227.40

Anybody investing in a 401(k) Plan should strive to be diversified across different asset classes (small stocks, large stocks, bonds, etc.) Beyond that, participants should consider ...

1. Control costs

All 401(k) plans cost money. Happily the TAG 401(k) Plan is less expensive than many. Vanguard funds are among the most cost-effective in the industry, and the Target Date Funds, which most TAG participants are using, cost a mere 16-18 basis points. Beyond the Target Date funds, the plan has an array of low-cost index funds.

2. Roth 401(k)

Starting in January, the guild will offer a Roth option for most participants.

3. Minimize 401(k) Plan loans

The TAG 401(k) Plan offers a loan option for participants, which from time to time comes in handy, but we don't recommend that participants use it if they can tap money from someplace else. Interest on loans is not high, but it is tied to prime interest rates and participants pay back pre-tax dollars with after-tax dollars. This means that when they pull the repaid money out to use in retirement, they'll be paying taxes on the cash twice.


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