5 Things to Ask Your Pension Provider

You cannot assume your pension is good hands simply because it is sitting with an adviser. You should be constantly asking questions and seeking the most advantageous structures to allow you to save for retirement and put your money to good use. You will likely have a host of questions on this topic, but here are some of the most important questions to ask from the start.

#1 What Are My Contribution Limits

You need to know how much you can put into your pension each year. This will set the guidelines for your savings. You should aim to contribute the maximum contribution to capitalize fully on tax and employer benefits. However, you may be able to expand the limit by opting for a mix of pension funds, such as a 401k as well as an independent account.

#2 Am I Getting the Most Tax Advantages

Depending on your tax bracket, you may not be in the best option for yourself now and in the future. For example, a young person in a low tax bracket may benefit from using a Roth IRA or Roth 401k option. While the limits are low and you must pay taxes on the contributions, they are only taxed once. These means you can withdraw the funds later tax-free, which is advantageous if you anticipate being in a higher tax bracket in the future.

#3 What Happens If My Company Goes Bankrupt

Your pension may be entirely independent, such as a self-funded IRA. However, if you have a 401k or company-funded IRA, then you should be concerned about where the funds will go if a bankruptcy occurs. Some of your funds may be protected, but not all. You should know when your funds are considered "fully-vested," meaning they are totally contributed to the account. Funds that are in transition between your paycheck and your account are the most at risk in the case of a bankruptcy.

#4 What Is My Risk Level

Your pension is not just sitting there waiting for you. While your funds are invested in the account, your pension administrator is further investing them into the stock market. You may find your pension provider opts for a mixed-risk portfolio while you have a low-risk preference. IRA pension funds are typically more flexible, while 401k options are often very low risk. Know where you fall so you can anticipate large swings or stable growth accordingly.

#5 What Withdrawal Options Do I have

It is easy to think you will never have to withdraw or borrow against your pension. However, situations occur that are out of your control and may cause you to need these funds. The money is rightfully yours, but you will have to pay penalties if you claim the funds before the time you are 59 1/2. There are some options to withdraw without penalty or receive loans against he funds. Knowing these options will help you determine what you should do if a pressing fiscal need arises at some point in the future and you cannot find funds elsewhere.


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