February 20, 2009
COLUMBUS, Ga-(WTVM)- Sears, Starbucks and Fed Ex are just a few of a growing number of companies suspending matches to 401(k) contributions. So if this happens to you, what do you do?
Experts say no matter what, don't quit saving all together! Columbus broker and financial planner Terry Barnhardt says folks who continue to contribute to their 401(k) still get a big break.
"You're saving it pre-tax, the government is your biggest giver, you're not having to pay FICA, and it's all coming right off the top," says Barnhardt of Summit Brokerage Services.
Other options include rolling that money into a traditional or Roth IRA. Traditional IRAs still allow pre-tax savings, but there is a cap on contributions.
Bankrate.com Senior Financial Analyst Greg McBride says Roths make a good option for some. The funds contributed are taxed initially, but that means consumers won't be penalized on the back end.
The only downside to the Roth is a cap on income. McBride says another way to put the money to good use is to pay down high interest rate debt like credit cards and personal loans.
In addition, Barnhardt says it may also be a good time to build a bigger rainy day fund.