Friday, December 14, 2018


Banner Content

If you’re not sure how to take money out of your 401(k), you are not alone.

580504537

Jose Luis Pelaez, Inc. | Getty Images

The company has compiled a Confusion Index based on queries its AI technology fielded from at least 3,000 users.

The one topic that drew the most questions: understanding the different withdrawal options, according to Dream Forward. That includes 401(k) loans, early withdrawal tax penalties, hardship withdrawals and in-kind distributions.

The chart below shows which topics came up the most in the Confusion Index (click to enlarge).

“You have to figure out which makes the most sense for you, and each plan is different and might not have the same options,” said Grant Easterbrook, co-founder at Dream Forward.

Other topics that serve as the biggest pain points for retirement plan investors include tax-related questions and challenges with understanding investing concepts, terms of a company match and profit-sharing programs, and rollovers.

More from Personal Finance:
Take this key step to protect your heirs and retirement accounts
Most young workers are using retirement accounts like an ATM
Here’s one way to give your kids a jump-start on their future

To reduce the complexity, the challenge is twofold, according to Easterbrook.

First, the financial industry must simplify retirement plans and the language through which it communicates the choices that are available.

Second, consumers must take a proactive approach to their retirement savings, Easterbrook said. That means seeking extra help from a financial advisor and/or your human resources department if the choices for your plan confound you.

“Think about it in terms of benefits,” Easterbrook said. “If you are sitting on a tax bracket threshold, by even saving a couple thousand dollars in your 401(k), you can lower your taxes.”

0 Comments

Leave a Comment

Advertisement

Predator 21 x