Question: I just started a new job and I’m not yet eligible to participate in my company’s retirement plan. What steps can I take to save in the meantime?
Answer: Many employers impose a waiting period, typically six months to a year. But that doesn’t mean you have to put your saving strategy on hold.
If you already have a 401(k), your former employer may offer to send you a check for the sum of your savings. Banish thoughts of buying a new car or paying off credit card debt, said financial planner Joe Birkofer of Houston-based Legacy Asset Management.
Don’t let the commotion of a new job distract you from making the most of your savings. Roll over your money into an individual retirement account, or open a new IRA if you’re just starting out, Cornell said.
Check to see if your company offers a direct debit program that allows you to funnel after-tax money into a personal IRA, he said. Also, many IRA managers will let you set up a direct debit from your bank account.
Ask if you’ll be automatically enrolled in the company’s plan after the waiting period expires, Cornell said. Be sure to sign up yourself if not.
If you were offered a signing bonus to switch companies, you can use that chunk of change to jump-start an IRA. A Roth IRA is usually the best option, because contributions to traditional IRAs are complicated by previous participation in an employee retirement program, Birkofer said.
Associated Press
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