The stock market has been on a bull run for the last few months. Many 401k plans have gone up in value because of the exposure to stock investments within the plan. If your 401k plan account value has risen anywhere near the 20% range like the overall market did – you may want to consider what happens next. If you believe the stock market is not volatile and is going to continue to go straight up no matter what our nation’s economy does then you can stop reading right here. However, if you have some doubts about how and why your account has grown and whether it will continue to grow then you might want to consider your options. So, how do you lock in your gains?
Here are your choices:
1) Reallocate your 401k holdings within your plan. Move 100% of your money to the money market or Stable Value option. This will lock in what you have gained up to this point. Unfortunately, current rates are in the .5-.8% range. Bonds will not guarantee the value of your principal.
2) Take a Non-hardship in-service distribution – which allows you to take money out of your plan and move it to an Individual Retirement Account. This will allow you to find safe money options such as Fixed Indexed Annuities. These options should outperform money market holdings and have the advantage of locking in your gains each year. Unfortunately, this will only be available to you if you have reached the plan’s designated retirement age. Ask your HR person what your plan’s retirement age is. It should be in the Summary Plan Document that is yours or the asking.
3) Using a Fixed Indexed Annuity inside your current 401k plan. Some 401k plans have this option available to you. If yours does not – ask your HR department to consider adding the option to your current plan or to change providers to one that offers fixed indexed annuities inside their 401k offering.
Again, this is only for those who think that what goes up must come down. If you are still digging out of the hole that was dug for you back in 2008 then you should realize how valuable locking in your gains can be.
To learn more from this annuity professional, simply click here (Jerry Rogers).
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