How to Move Money in a 401k

Many 401k holders leave their retirement account to grow with each paycheck. However, you need to be attentive to how well your 401k is performing in order to have sufficient money upon retirement. It is important for you to move money within your 401k to avoid bypassing retirement for years of additional work.

Difficulty: Moderate

Instructions

1. Diversify your 401k account with multiple investment choices to create greater returns. You should mix safer money market options with riskier mutual funds within your 401k to create good returns upon retirement. As your career progresses, you will have more money to move around within your 401k.

2. Place a good portion of your 401k funds into a money market fund to maintain a good principal balance. These funds provide a low return rate but they have a miniscule chance of declining in value over several decades.

3. Shift some of your 401k distribution into mutual funds for a sound long-term investment. Mutual funds come with a variety of risk levels, but a small percentage of your distributions can go a long way with these funds.

4. Invest in your company through your retirement account by placing funds in company stock. You can move money in your 401k to company stock with the click of a button in order to take advantage of your employer's success. This funding option is advantageous because it requires less paperwork than other movement options.

5. As the market rises in value, increase the deferral you make to your 401k with each paycheck. This method is only available for those who haven't reached their annual contribution limit. An increased contribution means you are maximizing the value of your company's matching funds.

6. Repay loans made from your 401k account through your regular paychecks. Many account holders use the 401k as a lending tool if they need to pay off bills, cover tuition or purchase their first house. You can take advantage of the full repayment period by spreading payments out through your paychecks.

7. Allocate a small portion of your 401k account to foreign investments that are returning high dividends. You should investigate foreign market options through your 401k custodian to determine the best long-term option for your retirement funds.

Tips & Warnings

• Switch your 401k type in order to move your money into a higher-yield account. Your employer offers at least 2 retirement fund options, including a money market account for safe savings and another investment account for risk takers. Keep track of how other funds perform early in your career to maximize returns.