Employer retirement plans: What to review during open enrollment

Key Points

  • Employer-sponsored retirement plans can be a key component of your retirement savings.
  • Open enrollment season is a great time to evaluate these accounts and make sure you're on track for a confident retirement.
  • In addition to making 401(k) contributions, you may want to consider a traditional or Roth IRA.

Are you taking full advantage of your employer-sponsored retirement plan?

Open enrollment is an excellent time to take a look at your retirement savings. Here are three important steps to take.

1. Check your 401(k) contributions

Make sure you are making the most of this important workplace benefit. Ask yourself these questions regarding your 401(k) plan:

  • Are you leaving money on the table? If your employer offers a match, confirm your contributions are enough to get the full amount of that match.
  • Are you contributing as much as you can? Check to see what your maximum 401(k) contribution is, and determine how close you can come.
  • Did you get a raise recently or are you in line for a bonus? That’s money you won’t likely miss day to day, but it can compound quickly in a tax-advantaged 401(k) retirement plan.

2. Rebalance your retirement accounts

Now may be a great time to review your retirement portfolio's investment mix and performance to make sure you're on track to meet your goals.

This includes any 401(k) retirement plans as well as individual retirement accounts (IRAs) and, importantly, how those accounts are working together. Your financial advisor can help with this.

3. Consider opening a new IRA

As you evaluate your retirement savings, you may decide you’d like to save more than you are eligible for in your employer-sponsored plan. In that case, you may want to open a new IRA, which shares many of the same tax advantages as a 401(k).

You could also consider the opportunity to add tax diversification to your portfolio by converting a traditional IRA to a Roth IRA. With higher tax rates always a possibility, a Roth IRA gives you the opportunity to pay your taxes at today's rates. Then, you can enjoy tax-free growth and tax-free withdrawals once certain requirements are met.