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GDL: Cardinal Pointe Financial Group on GDL! - YouTube
Channel: WHAS11
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changing jobs can be exciting but there
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are some challenges to a new career
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beginning
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jonathan littmer of cardinal point
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financial group is joining us this
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morning
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good to see you jonathan now when you're
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getting ready to start a new job at
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a new employer what are some of the
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things that people really need to think
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about from an
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investment perspective yeah andy that's
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a good question so
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you know anytime you start a new job it
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can be daunting because there's so many
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things that you need to take care of
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so my advice would be one make sure that
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you know what the benefits are in your
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new company
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and i have just a few items to touch on
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to make sure that you you don't leave
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anything behind
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so one make sure to enroll in your new
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company's 401k plan
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this is critically important because in
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a lot of cases it will not happen
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automatically
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so there will probably be a form or a
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web portal
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that you need to get access to where you
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can go in and make sure that you
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you are a part of that 401k plan um
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secondly not only do you need to enroll
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in the plan
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you need to set your contribution
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percentage
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um that way the company knows well how
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much do we take out of their paycheck
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and best tip for this is you know check
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to see what your company is going to
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match you
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and at least put in whatever the
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company's matches
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it goes back to the saying of you know
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you don't want to leave any free money
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on the table
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um thirdly so make sure you set up your
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in
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your investment elections so most 401k
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plans are going to have a default fund
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and
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unless you want to be a part of that
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default investment choice
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which they make for everybody you need
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to go in and manually
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tailor those investments to you
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lastly check to see if there's any other
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benefits you know 401ks are the big ones
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that most companies provide
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but there are also things called stock
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plan purchase accounts
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where if your company is publicly traded
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you may be able to purchase shares of
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their stock at a discounted price
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right through your paychecks so just
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just make sure you're not overlooking
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any benefits
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earlier you mentioned making your
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investment election now when enrolling
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in your new plan so what are some of the
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basics that people need to know about
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that
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yeah so when enrolling in your plan i
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mean that from a high level you really
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have
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two basic options so one is
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you can do it yourself from an
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investment perspective
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so they are going to have a list of most
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companies are 20 to 30 mutual funds
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some of them more or less you can go in
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manually and literally choose what
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percentage of your money
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you want to go into each individual fund
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this is definitely more for the hands-on
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investor
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as not only do you have to choose the
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funds initially
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you are also going to need to make sure
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you go in and rebalance
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and constantly monitor the investments
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on an ongoing basis
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the second option is more for the
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hands-off investor
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and that's you can choose a target date
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fund or a life cycle fund
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which is solely based on your age or
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retirement date
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this is going to do most of the work for
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you and i mean again it's ideal for the
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hands-off investor
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now roth iras have become increasingly
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popular jonathan you know this for sure
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should investors use a roth 401k
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if that's available to them yeah you're
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right andy so roth iras have been
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increasingly popular
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but the one that can get overlooked is
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the roth 401k
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which i think has even more benefit for
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those who have access to it
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so my first piece of advice is make sure
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that your company has one
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not all companies offer the raw 401k but
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if you're one of the lucky individuals
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who do have access to that
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yet make sure it's available to you and
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the big benefit is you know you're gonna
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put in
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after tax money so you pay the taxes
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ahead of time
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and then all of that growth is going to
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be tax-free
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when you take it out as long as you meet
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certain eligibility requirements
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so huge benefit um you know the other
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big benefit of the roth 401k
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is you know an ira your your
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contribution limit is six
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thousand dollars if you're under 50.
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whereas with the 401k
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the roth limit is 19 500.
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so you can see where you can get a ton
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more roth money put into the 401k
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which is going to equal a ton of more
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you know after tax tax-free growth
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okay so now that you've enrolled in your
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new 401k
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plan what do you do with that old 401k
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that you might have at your
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last company i hear people ask this all
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the time
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yeah so it's a very big question angie
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you know for me personally the question
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i get a lot is
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should i roll my money into an ira and
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you know that could
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be the right approach but i just want
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people to know i mean you have several
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options
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so i just want to run through those
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quickly so option number one is
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you don't have to do anything you can
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leave your money in that old company's
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401k plan
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in most cases as long as you'd like um
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you know the benefits of this are
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one you may qualify for that age of 55
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tax break where if you left the company
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when you were
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55 or older you could potentially take
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money out penalty free
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even though you're not 59 and a half so
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watch out for that
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um next you know 401ks they
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may have lower cost investments inside
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of them
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than what's available to you outside so
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make sure
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know what you own inside of that plan
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and that may be a good enough reason to
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stay put
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you also may have access to what's
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called a stable value fund
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so in today's environment interest rates
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are are dirt cheap they're next to zero
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stable value funds are almost like a
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certificate inside of your 401k
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and a lot of times the interest rates
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are higher so check to see if you have
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access to one of those
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and then lastly you know for the stand
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plan option you may have an existing
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loan balance on your 401k if you do
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when you roll that money out that loan
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is going to default automatically
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meaning you pay taxes so if you can
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leave the money in that plan
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and if they do let you continue making
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payments that's a good reason
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why to stay in that plan so that's one
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option
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the next option is you can roll to your
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new company's plan
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this is a very common approach i think
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the biggest benefit of this route is
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usually consolidation
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you know it's easy to have all of your
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new money and old money in one spot
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again you know you may have low cost
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investment options available to you
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but also check to see if you have any
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unique
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investments in that plan 401ks
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you know typically have investments that
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you can't buy elsewhere
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so that's that's another check mark for
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the roll to the new plan
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um you know the other big one is if you
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need a 401k
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loan the only place you can take a new
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one is on your new company's plan
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so that's another reason why you may
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want to move your own money to the new
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plan
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and then lastly so the third option is
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the rolling to an ira
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um like again very common discussion
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um you know the big reason why someone
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would roll to an ira there's a few
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reasons so one is investment
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selection an ira is going to give you
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access to stocks
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etfs mutual funds bonds
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so you're going to have access to you
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know typically quite a few more
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investments that you may not otherwise
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have access to
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but be sure to check you know some 401ks
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now
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offer what's called a brokerage link so
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that may be another alternative
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now secondly you know you can have
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investment management with inside of an
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ira
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where if you have an advisor that you
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like and trust they would then have
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access to go in and manage those
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investments on your behalf
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with anything just be sure that you know
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which types of fees are involved
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for whatever option that you choose
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jonathan last question are there any
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other
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benefits of 401k plans that we haven't
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addressed here i know that we've got a
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lot of information as always we post
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these up on greatdaylive.com
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and people can re-watch these but any
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other benefits of a 401k plan
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yeah andy i'd say probably the biggest
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benefit that we haven't talked about yet
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is 401ks save in a way that's easy
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they take the money directly from your
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paycheck you don't have to think about
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it you don't have to manually go in and
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send in the contribution
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so literally it just happens behind the
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scenes automatically for you
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so that's usually the biggest benefit
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for most people you know you'll
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turn your head look back 20 years later
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and you may have a sizable balance
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if you're enrolled in that 401k so
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that's the last last parting advice is
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just
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don't overlook it enroll because it's
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very easy to save
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inside of those plans i like the thought
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of looking back over your shoulder a few
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you know years later and going oh take a
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look
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exactly exactly good to have you
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jonathan thanks so much for taking the
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time as always now if you are interested
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in learning more
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about how you can work toward achieving
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your financial goals
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contact jonathan littmer you can reach
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him at cardinal point financial group
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a private wealth advisory practice of
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ameriprise financial services
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simply by calling 502-4896
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i know jonathan looks forward to your
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call
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