Company retirement plans can be confusing.
There are a lot of things that can happen with a plan and in most cases, your employer isn't required to disclose or teach you about any of them.
In other cases, your employer does disclose information, but you just don't know where to look.
Here are some basic concepts that will get you started with your employer's defined contribution retirement plan starting at step one.
Step 1.
Contact the Human Resources department at your employer and ask them if there is an employer sponsored retirement plan.
Don't be afraid to look dumb.
From my experience, some of the HR people I have encountered in my work are as clueless about the plan as you might be.
However, while they may not know your answers, they will have access to key documents and information like the following: 1.
Plan Documents - The Plan Document will describe the plan and give you basic information about enrollment, the trustee, and vesting.
2.
Enrollment Forms - These forms will be necessary to enroll in the plan.
You may already be enrolled, but it's a good idea to get these forms just in case you aren't.
3.
Marketing Materials - All good financial advisors have a wealth of marketing materials and most likely they've given a pretty hefty stack to the HR department.
4.
Trustee Contact Information - The trustee is usually a bank, brokerage, or mutual fund company in charge of the plan.
While the Human Resources department may not be able to answer your questions about enrollment, the people who actually make money off of the plan should be able to tell you how to enroll or how to access your current account.
Step 2.
Find out when enrollment starts.
In my current employer's plan, enrollment begins every December and is automatic for all full-time employees.
I have also seen companies that only have voluntary enrollment, thus, you must fill out the appropriate forms.
My wife actually works for a state government, which has multiple retirement plans.
One of these plans is voluntary and gives a 50% match on your first $100 a month contributed.
If she hadn't researched her options, she would have missed out on $600 in retirement savings a year by not enrolling.
Again, you may have to ask your Human Resources department first, and if they don't know, go directly to the trustee with questions.
Step 3 Once you find out the deadline for enrollment, fill out the necessary forms.
This may be unnecessary if there is automatic enrollment.
Make sure you decided on the proper allocation of funds in the plan.
This usually requires some type of form, and in many cases, can be done online through the trustee's website.
If you are uncertain about which funds to choose, then you can either: 1.
Ask for help from a professional.
2.
Or, do some research at websites like Yahoo! Finance.
The Plan Trustee should be helpful in this matter as they have an interest in helping your money to grow for severalreasons.
First and foremost, they want to make money.
Keeping you happy should help to keep you as a customer after you leave your employer.
Second, the better the growth in your account, the more they will be able charge you down the road.
Doing your own research may sound like a good idea, but keep in mind your inexperience in this area.
Reading a few articles or books is no substitute for the sound wisdom of a trusted professional.
You wouldn't tell a doctor how to perform open heart surgery, but you may use WebMD to find out the symptoms of the disease.
Investing in a retirement plan can be a similar journey.
Step 4 Keep collecting and reviewing information on your account and don't let minor hiccups get in your way.
When I first tried to sign onto the Trustee's website and view my account statement, I was surprised to find out that it would not accept my login information.
After discussing this with Human Resources, I discovered that someone had incorrectly keyed my birth date into the payroll system at my employer.
This was quickly resolved.