If you’ve been carefully tucking money away in a 401k plan and dreaming of the day you can retire, you may be shocked to learn that money is being withdrawn from your accounts without your knowledge.

Beware of Hidden Fees

Before you call the police, you’ll need to understand how 401k plans work. A number of administrative fees are built into and deliberately buried within the plans. Twenty years ago, the cost of administrating a 401k was the responsibility of the employer. Today that burden has shifted to the employee. It’s up to you to do the detective work to ferret out the hidden fees so you’ll know exactly what you are paying for.

The Disclosed Fees

It’s relatively easy to find the first set of fees you are paying. If your plan invests in mutual funds, look at the expense ratio, which is found in the prospectus. These fees are commonly referred to as management fees. Participants are usually familiar with them, as they are routinely disclosed by plan administrators and employers.

Mint Tip: You can evaluate expense ratios for mutual funds using the FINRA Mutual Fund Expense Analyzer and tools from the SEC.

The Hidden Fees and How to Find Them

Administration fees are the fees that most participants don’t know about. They are in addition to the management fees, but much harder to find. Here’s where to look:

1.    Transaction History. Look at your transaction history for removal of partial shares. If you see a transaction that doesn’t look familiar, you can bet that the shares are being removed as part of an administration fee. Don’t be surprised to find that the plan is routinely removing enough shares to cover a standard fee on a regular basis.

2.    ERISA filing. If you can’t find any fees in the transaction history on your account statement, ask your human resources department. Most companies, depending on size, need to report the expenses of employee benefit plans to The Department of Labor in an annual Form 5500 filing. The filings are available to the public.

3.    Employer. Don’t expect your employer to give you the answers you are really looking for. Because employers and 401k providers negotiate packages, chances are they won’t tell you all the options they had to choose from and whether or not they picked the least expensive option. The reality is that you may never know how much of your retirement money is being eaten up by fees.

The $660,000 Example

The Street recently detailed an example that shows the long term impact from fees:
“A 25-year-old employee who currently has around $25,000 in his or her retirement account, and whose annual contributions (and employer matches) total only $2,500, in a plan that is allocated 80% to stocks and 20% to bonds, could forfeit more than $660,000 by age 65 — if the plan charges excess fees totaling just 1% a year.”

Saving More Can Penalize You

Personal finance experts will tell you that the most surefire way to make sure you’ll have money for retirement is to put as much as possible into an interest earning savings account within your 401k. Makes sense, but believe it or not, your employer could be penalizing you for being a good saver! Fees are often charged as a percentage of balance. Diligent savers pay much more than people with lower balances. Shouldn’t administrative fees be the same for everyone? After all, mailing costs and administration procedures wouldn’t change based on the size of your account. However, if you have a large balance because you’ve done a good job at saving, you’ll be taking a bigger hit.

What Other Options Do You Have?

Of course if the bill doesn’t pass, or until it actually does, you should be evaluating your options. Unfortunately, you’re pretty much tied to your 401k plan since your employer provides it as an employee benefit. However, here are some things you can do:

• Utilize an IRA to save some money. See the comparison between a traditional IRA versus a 401k to determine which retirement saving option is right for you (taking into consideration the 401K’s employer match).
• Use the 401k shaft detector. This money management spreadsheet helps you determine if your 401k is the best option for retirement savings. The spreadsheet was created almost 9 years ago, but the calculations still work as long as you enter the correct tax brackets.
• Determine if your employer adopted an amendment to permit in-service, non-hardship withdrawals. This amendment will allow you to roll over your 401k money to an IRA.
• If you switch jobs, compare the costs of moving your money to an IRA instead of leaving it with your old plan or rolling it into your next one.

Be sure to provide feedback to your benefits department about your 401k plan. Ask them questions and voice your concerns. After all, your 401k plan is part of your compensation package and you should take responsibility for it, just as you would for your salary and other negotiable benefits.

You were miserable in your old job and you’re excited to be starting a new one that’s much more to your liking. Say good riddance to an overbearing boss, long hours, low pay and high stress. But there’s one thing you shouldn’t leave behind.

If your money is still sitting in your previous employer’s 401k account, it’s time to move it into an account where you can control the fees and investment choices instead of letting your old employer make those decisions. This move is commonly referred to as a “401k rollover,” and depending on how quickly you act, it can have a significant impact on how much you’ll have at retirement.

Why Roll Over?

Rolling over your previous employer’s 401k account into a single IRA is the only way to make sure that your 401k accounts follow proven investing strategies such as asset allocation and diversification, as well as paying the lowest fees you can and being able to invest in the best performing securities. And with an IRA rollover, you preserve all of the existing tax advantages of your 401k. Here are some of the advantages to rolling over:

1. More and Better Investment Options

In an IRA, you can select your own investments. You won’t be limited to the funds and managers selected by your employer. Consider that the average 401k employer plan contains just 13 investment choices making it difficult, if not impossible, to achieve a diversified portfolio whereas an IRA can give you access to thousands of investments, including stocks, bonds, CDs, and mutual funds.

2. Lower Fees

Under a 401k, the average annual administration fee charged to your account is 0.50 percent. These fees represent money that is being wasted and worse, this money isn’t being used to fund your investments. Most IRA rollover accounts do not have any administrative fee associated with them and this represents an immediate saving. In addition, because you can choose where to invest with an IRA account, you’ll get to take advantage of funds that typically have lower expense ratios than funds available through your 401k.

3. Easier Account Management

With your retirement money earned from prior jobs in a single place, you’ll be able to see whether you are on track for retirement, without having to check multiple accounts. You can easily calculate your real return and drill down into the performance of individual funds or other investments.

4. Easier Asset Allocation

With one account for consolidating your retirement assets, you’ll be able to more readily see the mix of investments in your portfolio and adjust the balance as necessary to stay on track with your retirement goals.

How Mint Can Help

Let Mint track your new IRA. Mint can provide unprecedented visibility into your retirement accounts. You’ll see how much you are holding in your preferred asset classes and if your portfolio matches your intended asset allocation. In addition, Mint will show you how your portfolio is performing compared to the S&P 500 index, right down to the level of individual stocks.

The financial meltdown of late 2008 may have left you with a feeling of uncertainty about your financial future. But death and taxes notwithstanding, there are still some things you can control. First and foremost is taking charge of your 401k. Don’t leave money on the table. Rollover those 401ks from a previous employer today and start taking advantage of the broader investment choices, lower fees and simplified account management that comes from an IRA rollover account.

You should definitely get going down the (virtual shopping) aisle to find smart ways to save money and manage your expenses on the less important elements of the Big Day. And, drawing from the list below, you’ll probably find ways to spend less.

Flower Girl-sized Suggestions

• Print your own invitations.
• Make your centerpieces and favors.
• Make your veil, ring pillow, and other accessories.
• Create a CD of music instead of hiring a deejay to play at the reception.
• Substitute a personalized collection of music or pictures or a video for more expensive, and likely less memorable, favors.
• Use balloons instead of flowers to decorate.
• Donate your wedding dress and accessories as a tax deduction.
• Drop the extras. Among Family Education’s smart wedding cost saving tips are their suggestions to stay away from bubbles, favors, and embossed napkins.

Bridesmaid-sized Suggestions

• Have your wedding on a Friday or off-season.
• Serve brunch or appetizers instead of a full dinner.
• Buy your dress from the donation center
• Share the cost of decorations and rentals with the couples that are using the same facilities before and after your ceremony
• Consider buying versus renting; table linens may actually be cheaper to buy than to rent.
• Consider borrowing versus renting or buying. Family members and recently married friends have often saved special cake knives, toppers, or even a dress from their own weddings. They may be honored to have you want to include them in your Big Day in this manner.

Mother of the Groom-sized Suggestions

• Limit the size of your wedding
• Buy your own beverages, if your venue allows it. Offer limited options instead of a full bar. Limit choices to wine and beer, with champagne just for the wedding party.
• Be careful about choosing a “destination wedding” to save money. Many couples end up throwing a reception back home for guests who couldn’t make it. You’ve just doubled your wedding expenses.
• When requesting quotes from vendors, avoid the “wedding upsell” by describing your event as a “family gathering” rather than as a “wedding”.
• Always negotiate with vendors; ask for discounts for paying upfront.

Take Tips From Those Who Married Frugally

To help you with your wedding budget planning and to inspire you to adhere to your personal budget, here are additional ideas on how to have a wonderful wedding from people who’ve hosted their own frugal events:

• The Wedding under $5,000. Make your own wedding gown, have a family member handle the photography and make the cake, and serve lunch instead of dinner.
• The Wedding for $5,786. Have the men wear suits instead of tuxes, print your own invitations, and keep the wedding inexpensive for your attendants, too.
• Radical Wedding Tips. Rent your dress, fake the wedding cake, marry in a park.

• Tie the Knot on a Shoestring’s Top 10 list says Barter! And avoid the month of June.
• How to Save Money on Your Wedding Ceremony and Reception Use local college musicians, and stick to your Big Day schedule to avoid additional charges by vendors
• Frugal Bride Check all vendor contracts to see if they already include gratuities.

If you recently tied the knot for less, please share your best tips with other “-to-be’s” here.

Related Mint tips:

Budget Help
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Tracking My Money
Free Money Manager

Once you’ve agreed on the rough date, location and size of your wedding, you can start creating a budget that you can use throughout your wedding planning process. Follow these five simple, yet elegant steps to a budget that you two will both find realistic, and can cover the things you care most about for the Big Day:

1. Take that First Look

Most weddings are paid for by more than one person, and all of them involve multiple decision-makers. It’s smart to involve those “interested parties” early in the wedding planning to set realistic expectations and avoid misunderstandings later.

If you don’t routinely discuss personal finance management with your fiancé, parents, or in-laws, try bringing up the topic by explaining that you would like to look into creating a budget for the wedding to keep you from overspending. This should open the lines of communication.

Your goal from this step is to gain an understanding of the total budget you’ll have to spend.

2. Look for Chemistry

With your total budget in mind, use a comprehensive wedding budgeting checklist to guide a heartfelt discussion of each of your priorities for your wedding. Of all the items and services you could pay for (The Knot has a comprehensive list) which are most important to you?

3. Forsaking all Others

Now you’re ready to start estimating costs…and getting creative. Get information on what others have paid, in your city, for the items you’ve decided are critical to your Big Day.

If you’ve found that you’re already over your budget (and most of you will), it’s time to prioritize again. Some couples find it helpful to work from a sample budget. Here is the breakdown by category:

• Ceremony 3%
• Reception 48%
• Attire 10%
• Rings 3%
• Flowers 8%
• Music 8%
• Photography 12%
• Transportation 2%
• Stationery 3%
• Gifts 3%

Mint Tip: In our next blog post on smart wedding budgeting, we’ll cover some smart and unexpected ways to cut costs. You can save $100′s by taking a fresh approach to wedding attire, décor, entertainment and details.

4. Commitment

Armed with your (now) very short list of key expenses, you’re ready to get estimates of the approximate costs of each. Search Engines, recent brides and grooms and community websites are great sources for vendor suggestions. Contact those that meet your requirements, detail your needs and get their quotes. Assign the prices you find to the items on your list. Allow for some extras: tips, taxes, and a buffer for unexpected items. Total these up to determine how close or far you are from your overall budget. Still have a gap? Repeat steps 2 and 3 until you’re comfortably within your limits.

5. Engagement

Once you have your preliminary budget, good personal finance management dictates that you continue to use it as your working plan. Record each expense as you incur it. If you go over your budget in a given category, be sure to subtract the same amount from another category. If you come in under budget in any category, we recommend that you bank that savings against any future surprises. If those surprises don’t come, you’ll have some seed money for your first savings or investment account as a couple.

Mint Tip: You have several options for creating and monitoring a wedding budget in Mint. All of them free you from tedious tracking of receipts.

Some couples like to open and fund a separate account just for wedding expenses. Open a new Mint account just for that “wedding expenses” account and you’ll be able to budget by category for all of your expenses. Then sign up for Mint alerts to get email or text messages when you approach or exceed your specified budget for any category.

If you prefer to spend from an existing account, you can Label your wedding expenses and use Mint’s Search function to create a separate list of all your wedding costs.

More tips on how to use Mint.com for wedding budgeting in our third post, coming soon.

Mint Asks: Are you already using Mint to manage your wedding budget? Any tips to pass along? A pair of Mint t-shirts to anyone sending us wedding pictures from their Mint-managed nuptials!

Related Mint Tips:

Online Budget Management
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financial planning is something that we care about here at Mint. Learn more with great financial planning tips in our blog article index.

You know that good financial planning requires a smart strategy for retirement savings. But with the alphabet soup of retirement accounts available, it may be hard to decide which way to go. How can you tell if you should invest in an IRA or 401k? Or both? Which one is better? Let’s explore the features of each to get you moving in the right direction.

401k

A 401k provided by your employer can be one of your best financial planning tools. 401k’s allow you to save money in a tax deferred account via payroll deductions. Here are situations where you might want to take advantage of your 401k:

• Employer Match. If your employer matches your contribution, this is free money, and you should take advantage of it. Note that there are typically vesting rules which state how many years of service you will need to claim the entire employer match.

• Higher limits. During 2008 you can contribute $15,500 to your 401k. If you are 50 or older, you can contribute an additional $5,000. The 2008 IRA limits are $5,000 and an extra $1,000 for catch-up contributions if you are 50 or older. The higher limits on the 401k may come into play depending on how much you plan to contribute.

• Tax-deductible contributions. You can deduct your contributions from your taxable income in the year your contribution is made. This means that you will pay less taxes for that year.

• Defer your capital gains taxes. The gains on your investments will not be taxed while held in your 401K..

Note that the Traditional IRA also allows for deductible contributions and defers taxes, on capital gains but there are income levels that will disallow the deductibility of IRAs if you have a plan available with your employer.

IRA

While Individual Retirement Accounts don’t offer the matching funds that some 401k’s do, there are many situations where an IRA investment makes good sense instead of, or in addition to, a 401k. Here are some IRA benefits to consider:

• More investment options. With an IRA, you’re able to select the financial institution that holds your investments and you also have a greater variety of investment choices. You may be able to meet your ideal asset allocation much easier than in your 401k, where you are limited to the investments offered by your employers’ plan.

• Lower expenses. Often, with greater choices come lower fees. You will be able to utilize low cost index funds that may not be available in your 401k. Lower expense ratios will likely result in a larger portfolio balance for you by the time you retire.

• Later due date. While all your 401k contributions must be made during the calendar year, IRA contributions are not due until April 15. This later deadline gives you the time to estimate the taxes you’ll owe, calculate and make your IRA contribution, and then enjoy the opportunity to write a somewhat smaller check to Uncle Sam.

• Immediate enrollment. There is no waiting period to set up an IRA. Employers typically require a waiting period before a new employee can enroll in a 401k plan.

• Save for your spouse. With the use of a spousal IRA, you can contribute to both of your retirement savings. A 401k is only available for the employee.

Mint Financial Planning Tip: Find out what kind of IRA is best for you.

In this article, “IRA” refers to Traditional IRAs. If you are considering a Roth IRA, but unsure about which is right for you, check out Mint’s IRA Advisor. It’s a financial planning tool which can help you make this decision. Participation in either Traditional or Roth IRA’s could qualify you for the Retirement Savings Contributions Credit. See IRS Publication 590 for more information.

Availability of conversions. Consider as part of your long term financial planning that you may be able to convert your IRA to a Roth IRA in the future. And while rolling over a 401K to an IRA is not typically allowed until you leave your employer, there can be exceptions. Please check with your company’s plan about your specific circumstances.

Mint Financial Planning Tip: Consider leveraging the benefits of both a 401K and an IRA.

You may want to contribute to a 401k and an IRA to take advantage of their different benefits. For example, you could invest enough in your employer’s 401k plan to soak up all the matching funds that are offered. Then put the balance of your annual retirement savings in an IRA to increase your investment options and often lower investment expenses.

By understanding your tax-advantaged retirement savings options, you’re following Mint’s second Principle of Personal Finance: Making your Money work Hard for You. Any dollar you don’t pay in taxes is another dollar you can invest toward achieving the retirement lifestyle you want, sooner.

Further Reading:

As you move through various stages of life, not only do your priorities (and hairline and waistline) change, but so should your personal finance and tax strategies. Uncle Sam gives and takes tax credits and penalties based on your employment, marital, and family status. It’s important to know what changes and when, so you can stretch your dollars further. Here are some tax tips to consider at each of life’s major milestones:

Single and Working

Practice good money management by re-calculating your anticipated tax annually and adjusting your W-4 to match it. Just like Goldilocks, you’ll need to get your withholding “just right”. Under withholding results in a penalty; but over withholding is simply loaning your money to the government with no benefit to you.

Make retirement contributions. Reduce your taxable income through salary deferrals including 401k, 403b and 457 plans. In addition, if you qualify, you can receive the Saver’s Credit for Retirement Savings Contributions. See IRA Publication 590 for eligibility guidelines. Putting money into an Individual Retirement Account (IRA) can further reduce your taxable income.

Mint Tip: Not sure if you qualify for a Roth or Traditional IRA? Find the right IRA for you with Mint.com’s IRA Advisor.

Familiarize yourself with the standard deduction. Many deductions are only available if you itemize, including charitable contributions, real estate and state taxes. You should take the standard deduction if your itemized deductions are less than the standard deduction.

Married Without Kids (remember when they called you D.I.N.K’s?)

Exploit both the standard deduction and the itemized deduction. If your itemized deductions are similar to the standard deduction, consider bunching deductions and taking the standard deduction every other year. An example of “bunching” is to pay your property taxes both at the beginning of one year and at the end of the same year.

Compare the benefits offered by both of your employers and use the best combination offered. You’ll find that health care, insurance, flexible spending and other benefits vary widely by employer. It’s worth your time to study those HR documents and pick or “cherry pick” the plan that best benefits your personal finances.

Understand tax brackets and the “marriage penalty”. You may pay more taxes by filing as a married couple than you would if you were still filing as two single employees. This is what is commonly referred to as the marriage penalty, which exists for couples in tax brackets above 15%. As a general rule, if you and your spouse make similar salaries above that level, you may be penalized for filing jointly. If your salaries are quite different, you’re more likely to benefit from joint filing. Find out what’s best for your specific situation before choosing your filing status.

Young Family with Children

That sleep deficit may be partially offset with these tax credits:

Obtain social security numbers for children in order to claim them as dependents on your tax return.

Claim the child tax credit on your taxes. As long as your baby was born on or before December 31, you are eligible for the full year’s tax credit of $1,000 per child.

Enroll in your employer’s dependent care flexible spending plan. If you plan on using day care or a babysitter you can set aside $5,000 per year to pay for childcare with pretax income. That’s going to help make childcare more affordable. You can change the amount mid-year if your childcare provider changes, or if the rates change.

OR Utilize the Child and Dependent Care Credit. If your employer doesn’t offer a dependent care flexible spending account, you may be able to use this credit for up to 35% of your expenses, depending on your income. This credit applies up to $3,000 of the expenses paid annually for one child, or $6,000 for two or more children.

Be aware of the Kiddie tax. Children owe no tax on their first $850 of earnings — which creates a great opportunity to maximize income shifting. Earnings between $851 – $1,700 are taxed at the child’s rate and above that at the parent’s tax rate.

Stay home and continue to save for retirement. If one spouse does not work or has limited income you can still fund a spousal IRA — if you file a joint return. The amount is limited by your income and your age. See IRA Publication 590 for guidelines.

Family Focusing on College and Retirement Savings

Past the sleepless years? Congratulations! When your money management concerns shift to getting your kids to leave the nest, and to feathering your retirement nest:

Use college credits. Each year you can use either the Hope Credit or the Lifetime Learning Credit for each student.

• The Hope Credit is worth up to $1,650 per student per year for the first two years of post-secondary education.

• The Lifetime Learning Credit is for 20% of the first $10,000 of post-secondary tuition and fees. The maximum is $2,000 per tax return. See IRA Publication 970 for eligibility.

Take advantage of “catch-up” contributions. Those 50 and over can contribute an additional $5,000 annually to a 401k, and an additional $1,000 annually to an IRA.

Retired Individuals

Compare your income to the base amount. Social security benefits are not taxable if your modified adjusted gross income is less than defined base amounts. Base amounts are $32,000 for married filing jointly and $25,000 for singles. Make sure you understand your investment options in order to avoid having your social security benefits taxed if your AGI is near the base amount. This can be accomplished by shifting investments from taxable accounts to tax deferred accounts (like an IRA). In addition, beware of investments that provide large dividends and interest, both which will increase your AGI.

Mint Personal Finance Tip for 2007: If the only income you receive is social security, those benefits are not taxable and you typically won’t need to file a tax return. However, you will need to file a 2007 tax return to receive this year’s Economic Stimulus Payment.

Know your Gifting opportunities and limits. Each year you can gift $12,000 ($24,000 for married) per person without having to pay taxes. Any amount above this must be reported and can be taxable. Some gift tax exclusions: some tuition and medical expenses and gifts to your spouse, political organizations and charities.

Required Minimum IRA Distributions begin at age 70 1/2. You could be subject to an excise tax if you do not begin the distributions by April 1st the year after you turn 70 1/2.

As you can see, each stage of your life offers different tax related considerations. It’s worth researching your specific personal finance situation, possibly with the help of a tax professional, as the dollars involved can be significant. For additional details, income and phase out limitations, and all eligibility guidelines, be sure to check out the IRS website.

Mint asks: Do you see yourself in one of these lifestages? Any added money management tips for people in your situation? Is there an important lifestage (from a tax point of view) that we missed?

Further Reading: