How often should you check your 401(k) balance?

SmartAsset: How to Check Your 401(k) Balance

SmartAsset: How to Check Your 401(k) Balance

If you started a 401(k) and then forgot about it, you might be wondering how to check back into the account and see how it's going. In this article, we'll discuss how to check your 401(k), how often you should check it, and what to look for.

If you want personalized financial advice on how to prepare for retirement, consider working with a Financial Advisor.

What is a 401(k)?

a 401(k) is a tax-advantaged pension scheme. A 401(k) is set up through your employer and allows you to contribute a percentage of your salary to your retirement. That money comes out of your paycheck before it is taxed. And you only pay taxes if you withdraw from your 401(k) in retirement.

Although there is a limit to how much you can contribute to your 401(k) each year – and in 2024 that amount will be $23,000 – you can otherwise choose what percentage of your income you want to put toward your retirement savings.

Some employers offer one 401(k) match and the percentage will vary from company to company. For example, if you contribute 3% of your salary, your employer can contribute the same amount for each paycheck if they offer that percentage.

By matching employers, you can double the amount you save for pension. Most people should therefore take full advantage of their employer match if it is offered.

If you're ready to be matched with local advisors who can help you achieve your financial goals, start now.

Why is it important to check your 401(k)?

SmartAsset: How to Check Your 401(k) BalanceSmartAsset: How to Check Your 401(k) Balance

SmartAsset: How to Check Your 401(k) Balance

To some extent, your 401(k) – and most investments – will do just fine with a “set it and forget it” method. As long as you contribute steadily with each paycheck, you'll probably be fine.

That said, there are good reasons to check your 401(k) to see how it's progressing. As you get older and your overall financial picture changes, you may need to reexamine how much you contribute and your financial situation investment strategy.

It's important to keep track of which funds are performing well and which are not in your 401(k). If your 401(k) has funds that are doing well, you'll want to make sure you maintain good asset allocation and diversify your portfolio.

Rebalancing your portfolio can also go a long way. Markets change and the assets that were doing well in your 401(k) at one point may struggle. Rebalancing when necessary can help you during a market crash.

Not checking your 401(k) can seriously harm your retirement goals. Without properly checking, some investment funds and/or exchange traded funds (ETFs) can stay in your 401(k) account for a long time. That can significantly reduce your retirement bill.

Looking at your 401(k) regularly can help you see if you need to make adjustments to stay on track.

How often should you check your 401(k)?

Even though checking your 401(k) is important, it's not something you should do every day, every week, or even every month. Many experts recommend checking in two to four times a year.

When you check in, you will need to check your balance and balance investment portfolio with a view to the future. Are you on track to retire as planned? Today, many 401(k) portals offer tools to help you predict and see if your current contribution and investment strategy has you on the right path.

You can also use a 401(k) calculator such as those from SmartAsset to see how your current plan and situation is likely to play out in the long term.

How to Locate All Your 401(k)s

If you know you have a 401(k). But you don't know how to find it, there are basically three options you can use.

First, contact the employer who sponsored the 401(k). If it's your current business, you can do that speak to a human resources representative and ask them to help you access your account. And if it's a former employer, you can do the same as long as it's still active.

If the employer is bankrupt and you can't get in touch, it's time for some detective work. Take a look at your financial statements, your email, and anywhere else you keep important documents and see if you can find an explanation.

If you find a statement for your 401(k), you can contact the financial institution that services your 401(k) and gain access that way.

Additionally, you may be able to find more information by searching the National Register of Unclaimed Pension Benefits. Enter your social security number and see if any information appears.

Other places to look include the U.S. Department of Labor Abandoned Plan database and their Form 5500 database. Because companies must file a Form 5500 for employee benefit plans, you may be able to find contact information for a plan administrator.

How to contact your 401(k) administrators

SmartAsset: How to Check Your 401(k) BalanceSmartAsset: How to Check Your 401(k) Balance

SmartAsset: How to Check Your 401(k) Balance

According to the Association for Human Resource Management, the plan administrator is an officer or employee of the company that holds the 401(k). The simplest method is to call that company and ask to speak to the plan administrator.

Another way to track down your 401(k) manager is to use the above Form 5500 database from the Ministry of Labor: the contact details of your administrator must be on the form. That information may also be on your 401(k) statements if you can track one down.

In short

Checking your 401(k) balance is an important practice to ensure your retirement savings are on track. If you cannot find your 401(k), contact the employer with whom you opened the 401(k) to gain access.

Tips for a successful retirement

  • Planning for your retirement can be a challenging task due to many factors. A financial advisor can take a comprehensive look at your finances and help manage your money on your behalf. SmartAssets free matching tool connects you to up to three vetted financial advisors serving your region. And you can interview your advisor matches for free to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, start now.

  • Do you have enough to retire? Use SmartAsset 401(k) calculator to find out how your income, employer matches, taxes and other factors affect how your 401(k) grows over time.

Photo credit: ©iStock.com/jygallery, ©iStock.com/shapecharge, ©iStock.com/Marvin Samuel Tolentino Pineda

The mail How to check your 401(k) balance appeared first on SmartAsset Blog.

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