Seventy-eight per cent of eligible American employees participate in their company's 401(k) plan, comprising over 40 million workers. The Enron collapse, coupled with new uncertainty in the investing and accounting industries, however, has even longtime 401(k) investors rethinking their approach. This guide explains the basics of 401(k) investing in plain English, showing readers how to manage their accounts, minimize their investment risk and maximize their returns. It discusses the pros and cons of including company stock and helps readers decide whether taking out a loan against their 401(k) is a wise idea. The text explains the difference between a defined contribution and a defined benefit plan, including the pros and cons of each, has sample 401(k) portfolios for various stages of life and contains a retirement calculator formula so readers know how much they need to save.
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