A good personal financial plan starts with keeping track of your finances. Knowing where you are in your financial path helps you advance it, whether investing more or saving for retirement.
Many people have a practice of checking 401(K) balances once a year, ideally to see if they are on the right track. Hence, it is extremely important to know how to check your retirement savings in a practiced manner with ease.
Following is the in-depth guide on what is and to how to check 401k balance?
What Is a 401k Plan and How Does It Work?
In simple words, a 401k is a savings plan that employees adapt to save for their retirement years. The company employers, most of the time, add some more amount to make it grow faster.
The money invested in a 401(k) is usually placed in a range of assets, including stocks and bonds, with the goal of growing your savings over time.
One significant advantage is the tax benefits – your contributions are deducted from your taxable income, reducing your annual tax bill. It’s a valuable tool for building a financially secure retirement.
If you have done multiple jobs in the past, it is important to find your old 401k accounts and roll them over with the new ones to boost your retirement savings.
3 Things to Consider Before Checking 401(k) Balance
Following are the key aspects that you must know before checking your 401(k) balance.
- Contribution Percentage: It means how much money you will put in the 401(k) account. You decide how much to save, and some employers match a portion of your contributions.
- Vesting: Vesting is about ownership – it indicates when you fully own your employer’s contributions.
- Investment Options: Investment really helps you to grow sustainable wealth for the long term. So, if you have a retirement money saving, consider investing it somewhere, like stocks and mutual funds.
4 Ways to Check Your 401(K) Balance?
Here are the four best ways you can find your 401k balance:
1. Access the 401(k) Balance Online
You can check your 401k balance online by simply visiting your 401(K) provider’s website portal, log in with your credentials, and review your balance.
Moreover, you can also get updates about investments and check your financial history with just some taps on your mobile screen. These updates will keep you aware of your financial health and somewhat predict what your retirement life will look like – financially.
2. Contact Customer Services of your 401k Provider
Some people prefer to talk directly about their finances rather than clicking on some buttons on the screen. For them, there is a feasible option of calling the customer service of their 401(k) provider.
If your statement does not have the provider’s contact, you can contact your HR department to request the contact details. You can also look up the contact information of your 401(k) provider from the U.S. Department of Labor’s Form 5500 database.
3. Visit your Employer’s Website
Some companies also provide access to 401(k) portals through their website. Check with your company’s HR department or benefits portal. You might find your 401(k) balance information there.
4. 401(k) Statements: Electronic or Physical!
Your account provider should send a paper or electronic 401(k) statement regularly to your mailbox or email. The statement contains all the details of your plan, including your 401k balance.
Why Should You Check Your 401(K) Balance Regularly?
Monitoring your 401(k) balance is quite important to align your efforts with your financial goals. Here’s why you should check your 401k balance regularly.
1. Track Your Progress On Retirement Savings
You must have retirement goals or plans. Checking the 401(k) plan helps the person to really assess how far they have come to attain their goals. Plus, it also ensures that you will have a peaceful life after retirement without worrying about paying the bills.
2. 401k Risk Tolerance
Turbulence in the market can really damage your retirement goals in a way that disturbs the investment and risk tolerance. When you periodically check your 401(k) balance, you become aware of the funds and how much they value.
3. Adjust Contributions
Life throws curveballs at you. A raise, job change, or unexpected expenses may require you to tweak your 401(k) contributions to stay on track with your retirement plan. You may switch your investment to better-performing areas as you get a good picture of your portfolio.
What To Do After Checking Your 401(k) Balance?
Here’s what you need to do after checking your 401(k) balance to ensure your financial wellness:
1. Check Account and Investment Fees
Sometimes, high investment fees eat up all your savings for retirement. But, when you already know the exact cost of investment linked to your account, you can not be scammed easily.
2. Optimize your 401(k) Contributions and Investments
Take a close look at your investment portfolio and contribution percentage. Make changes as needed to stay on the path to your retirement goals.
3. Rollover Old 401k Account
If you’ve changed jobs and have old 401(k) accounts floating around, consider rolling them into your current one. This simplifies your retirement plan and might offer better investment options.
You can contact your previous employer’s human resource (HR) department for your provider’s information. In case your former employer is no longer working, you can find your plan through Abandoned Plan Search on the Department of Labor website.
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Contribution Limits For 401(k) Balance in 2024
You might be inclined towards the idea of investing so much in retirement accounts, but the government regulates the policies every year to limit the amount of investment. You need to know the contribution limits of the ongoing year to prevent any penalties in the future.
Here are the top facts you must know
- You can contribute only up to $23,000 to your retirement account in 2024.
- If you are above 50, then you can save an additional $7,500 with the previous amount. This figure is applicable for 2023 and 2024. This additional number is called a catch-up contribution.
- The total contribution of the employee and the employer must be under $69,000.
Your 401(K) is a key player in mapping out a secure financial future. Thus, knowing how to check 401k balance is one of the foolproof personal finance tips.
But remember, the journey doesn’t stop with checking your balance; it continues with thoughtful financial planning, regular check-ins, and steps to guarantee a financially secure retirement. You can also work with an expert financial advisor to optimize your savings.