Money Fix: When not to contribute to a 401(k)
Usually contributing to a 401(k) is good planning, but there are times, experts say, when it is time to hold back. Credit: iStock
While it may seem like financial heresy, there are some times when you shouldn't contribute to a 401(k).
The fees are too darn high! Fees are the silent killer. When they're around 2 percent, they eat away at your returns. Check out your plan's administrative, investment and management fees and if they're too high, just say no, says Glen Craig, publisher of FreeFromBroke.com.
And if you don't have 3 months' to 6 months' worth of emergency savings, re-evaluate the amount you're contributing to your 401(k) or stop contributing until you have your emergency stash. You don't want to have to tap your 401(k) if a problem arises; withdrawals can be costly due to tax penalties.
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