S2 E29: Company Retirement Plan Strategy for Long-term Success. Understanding Traditional vs. Roth 401(k) plans

Blue Chip FM

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In this episode of Blue Chip NOW!, we discuss the best ways to allocate a 401(k) plan properly, common mistakes people make, and how to get the most out of your workplace retirement plan. Join Daniel Dusina, Matt Mondoux, and Dan Seder as they explore different investment options, the benefits and drawbacks of various 401(k) structures, and why reviewing and adjusting your allocations regularly is essential.

Many people think of their 401(k) as a separate entity. Most are not going to be tapping in anytime soon so they treat it differently compared to other investments. Generally speaking, this is a large part of an individual's investable assets and a huge component of their overall balance sheet. 401(k)s have changed. There didn't used to be as much excitement around retirement accounts. There are now Roth options, after tax options, brokerage link options, and more. Many have the option to self-direct their 401(k) and invest in individual stocks which opens the possibility for personal gain that before wasn’t an option for most.

If you have not looked at your 401(k), 403(b) or even your 529 plan in a while you may want to or hire a professional to help. Key Points From This Episode:

[00:01:07] Changes in 401(k) investment options and the introduction of Roth options.

[00:05:34] Advantages and disadvantages of a traditional 401(k) versus a Roth 401(k).

[00:10:08] Investment options within workplace retirement plans and the pitfalls of a "set it and forget it" approach.

[00:12:54] Overview of target date funds, their pros and cons, and why visibility into them is crucial.

[00:16:22] Analysis of international investments within target date funds and their performance relative to U.S. markets.

[00:20:18] The importance of coordinating 401(k) allocations with other investable assets.

[00:23:11] Observations on the impact of plan size on fund costs and the importance of expense ratios.

[00:26:31] The need for regular review and adjustment of 401(k) allocations to align with individual financial goals.

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