Q: After 30 years, I am looking forward to my retirement in April 2013. Through the years, I have contributed to a 401k, and it is currently sitting near $70,000. I plan to stop my contributions to the 401k after I retire, but I am not sure if I should leave the money in the account, or would it be better to pull it out and place it elsewhere? With the current economic conditions, I am very worried if my money will be safe in the 401k. I am not looking to make any money on this, just want it to be in the most secure place I can find in these uncertain times. I greatly appreciate any help you can offer me. --- Jim, Roseville
A: Congratulations on your pending retirement.
Just as a point of clarification, you are not allowed to contribute to your company's 401(k) plan once you retire, so you will not have the option of doing so.
In general, an employer-sponsored retirement plan is as safe as an IRA as regards to the protection of your assets.
If your concern about safety relates to protection of principal, i.e., keeping what you've saved, it may make sense to transfer your 401(k) funds to Rollover IRA.
401(k) plans typically offer a number of "relatively" safe investment options, e.g., money market accounts, stable value funds, bond funds, but generally do not offer investments, whose principal, is guaranteed by the US government.
You can open up a Rollover IRA account with a financial institution, and invest your $70,000 in a savings account, money market deposit account, or Certificate of Deposit (CD) that is guaranteed by the Federal Deposit Insurance Corporation (FDIC) if the institution is a bank or the National Credit Union Administration (NCUA), if the institution is a credit union. The current protection limit is $250,000, so you would be fully covered.
Given today's economy, you won't earn much by going this route, in fact, you will probably not keep pace with inflation, but you can guarantee the current amount of your principal. If you wish to grow your savings, you will need to take on some risk.