How to ask your employer for halal 401(K) investment options

One of the first decisions you’ll need to make after accepting a job offer is deciding how you’ll invest your employer plan. These plans are generally funded with pre-tax money and, in many cases, your employer will match your contributions. That’s essentially free money. But most plan providers will offer you a limited menu of investments. Some may have a few socially responsible options, but it’s highly unlikely you’ll find a halal mutual fund. So, what are your options? Ask your plan provider if your plan has a self-directed brokerage account. It’s essentially a sub-account within your 401(k). As employees demand more options from their employers, these types of accounts are becoming more common. A self-directed brokerage account can offer you access to investment choices beyond your plan’s investment menu. This includes access to halal mutual funds. You should, however, proceed with caution. Investments chosen through such an account are not monitored by your plan’s provider. It’s your responsibility to read a fund’s prospectus so you understand its investment strategy, fees, and risks before investing. Once your account is established, most plans require that you maintain a minimum investment in your 401(k) account. Also, make sure you understand your plan’s

March 3, 2023 No Comments

Have you heard of a Roth 401(k)?

You’re probably familiar with traditional 401(k) plans, and we hope you know about Roth IRAs as well. (If not, check out these 5 things you should know about Roth IRAs). But did you know there’s also a Roth 401(k)? Basically, a Roth 401(k) is a 401(k) account to which you can contribute either pre-tax dollars, like a regular 401(k), or post-tax dollars, like a Roth IRA. All your contributions grow tax-free, but your pre-tax contributions will be taxable when you withdraw them in retirement and your post-tax contributions will be tax-free. It’s technically called a “designated Roth” account, and it’s an option your employer can add to your company 401(k) plan. The same provision for a Roth option can also be added to other kinds of qualified retirement plans, such as 403(b) or 457 plans. If you own a business and sponsor a qualified retirement plan for yourself and your employees, you may want to consider adding a Roth option. And if you’re self-employed and have no employees except your spouse, you could establish a solo 401(k) plan that allows Roth contributions. So why would you need a Roth 401(k) if you already have a Roth IRA? Here are four ways

January 8, 2019 No Comments