It’s never too early to start thinking about retirement and how you’ll manage financially without an income once you’ve stopped working. Regularly contributing to a 401(k) plan lets you save for retirement with tax-deferred savings and investments. An accountant can help you make decisions about how to invest a portion of your income in your employer’s 401(k) plan and develop a strategy designed for financial growth. Maximizing the benefits of your 401(k) will ensure you can retire with enough financial resources to live comfortably.

How to Maximize Your 401(k)

1. Have a Retirement Plan

Before reaching out to an accountant to discuss retirement strategies and 401(k) investment options, know your expected date of retirement as well as how much money you’ll need to be financially secure. This information will guide you in deciding how much to contribute to your plan and which investments to choose. It takes quite a bit of thought to figure out how much income you’ll need in retirement to live comfortably. Begin with an assessment of what you’re spending now. Next, determine which of these expenses will continue in retirement and adjust for inflation, approximately 2% per year.

2. Take Advantage of Company Matching

A 401(k) is a personal retirement account for long-term saving to which employees and employers contribute. Many companies offer some sort of match for the money that employees put into a 401(k). Whether it’s a dollar-for-dollar match or a contribution percentage, contribute at least the amount needed to get the full match. It’s essentially free money that will help your portfolio grow quicker. Talk to an accountant or your investment adviser if you have questions about your company’s 401(k) match.

3. Consider Tax Rates

A traditional 401(k) plan defers taxes on your savings and investment gains until you start withdrawing funds. Your tax bracket and tax rates, however, are likely to change over your working life because of government action and your earnings. An accountant will help you understand your financial standing at retirement and the timing of withdrawals to minimize the taxes you pay.

4. Ask About a Roth 401(k)

Discuss the possibility of a Roth strategy with your accountant or tax consultant. Some companies allow their employees to elect a Roth 401(k) over a traditional plan or a combination of the two. Taxes on contributions to a Roth plan are paid when you put the money into your account, not when you withdraw it. If you believe you’ll be wealthier later in life, an accountant may advise you to put a portion of your retirement savings into a Roth.

5. Wait Until You’re Fully Vested

Many companies finalize their matching contributions to your 401(k) only after you’ve reached a certain number of employment years with them—five years, for example. If you leave your employer before you’re fully vested, you’ll lose all of their matched contributions. Try to reach your vesting milestone before leaving to take advantage of your employer’s contribution to your retirement savings.

For more help maximizing your 401(k) retirement plan, schedule professional accounting services with the certified accountants at The Callen Accounting Group, PLLC, in Mountain Home, AR. As a full-service accounting company, serving clients in the Twin Lakes area, their highly trained team knows the best strategies to make sure you’re getting the most out of your retirement plan. They have the experience needed to work with you on creating a personalized plan that meets your financial goals. Schedule a consultation by calling (870) 425-6066, or learn more about their services online.