How to Check Your 401(k)

Every paycheck, a few dollars are taken out and put into your retirement account. But how do you know how much is in there?
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What Is a 401(k)?

A 401(k) is an employer-sponsored retirement plan enabling workers to save money in a tax-deferred way. Often employers will match contributions up to a percentage of salary. It’s just like any other retirement plan in the sense that you’re trying to save money and reduce taxes as you do it. Like an IRA, you will pay taxes once you start taking withdrawals in retirement.

If you opted for it when you were hired, every paycheck a percentage of your salary (say, 3%) is taken out and put into a 401(k) retirement account. Your employer may add some more money, maybe even the same amount, on top of that. That money is usually invested, and has been accumulating. How much is in there?

There are different types of 401(k)s. A Roth 401(k) operates much in the same fashion as a Roth IRA. While still employer-sponsored, it uses after-tax income to fund itself, so you pay the taxes now, and not later in retirement. While one can deliberate the merits of which to use, the general consensus is that a Roth format is useful if one believes they will be in an higher tax bracket later in life when withdrawing from their retirement accounts. 

Conversely, a traditional 401(k) advocate might argue that the ability to put more money into an account in the beginning and through time, allows the saver to make the most of compound interest. 

One of the advantages of a 401(k) over an IRA is the amount of contributions you can make in a year. For 2020, that limit is $19,500. That's an advantage over an IRA, which allows much smaller contributions. One drawback of a 401(k) is that it is held in an account managed by the company chosen by your employer, and likely has a limited selection of investments. Many, for instance, will be invested in the company that you work for. While that can be great if you work for Berkshire Hathaway  (BRK.A) - Get Report, it doesn't always allow for much diversification. 

To start saving for retirement in a 401(k), all an employee has to do is sign up for a 401(k) plan with their employer (usually the first day or so on the job), choose what percent of their paycheck to contribute, pick their investment vehicles, and the employer takes care of the rest. It's a good idea to talk to a financial adviser first, before making any 401(k) plan investment selections.

Read more about how a 401(k) works in this article from TheStreet.

How to Check Your 401(k) Balance

If you already have a 401(k) and want to check the balance, it's pretty easy. You should receive statements on your account either on paper or electronically. If not, talk to the Human Resources department at your job and ask who the provider is and how to access your account. Companies don’t traditionally handle pensions and retirement accounts themselves. They are outsourced to investment managers.

Some of the largest 401(k) investment managers include Fidelity Investments, Bank of America  (BAC) - Get Report, T. Rowe Price  (TROW) - Get Report, Vanguard, Charles Schwab  (SCHW) - Get Report, Edward Jones, and others.

Once you know who the plan sponsor or investment manager is, you can go to their website and log in, or restore your log-in, to see your account balance. Expect to go through some security measures if you do not have a user name and password for the account. 

Much of this should be covered when you initiate the 401(k) when you are hired or when the retirement account option becomes available to you. Details like contributions, company matching, and information on how to check your balance history and current holdings should be provided. 

Finding a 401(k) from a job you are no longer with is a little different. 

Say you leave your job and start a new one. You didn’t rollover your retirement into an IRA. That money doesn’t disappear. It's still there, it still belongs to you. To get it, contact HR at your former employer. If it’s been a recent move, it shouldn’t be too hard to track it down. If it's been a while, it helps to have identification and old account statements to show.

Read more on TheStreet about how to find an old 401(k) account.