While you might equate open enrollment with health insurance, it’s also a good time to tinker with other employee benefits such as those affecting your retirement. Every year, typically in the fall, for about two to four weeks, employees can elect or change the benefits their employer provides during open enrollment.
So what retirement benefits should you be eyeing while navigating your benefits portal? Here are several things that should be on your open-enrollment retirement checklist.
— Review current retirement contributions.
— Consider rolling over old 401(k) accounts.
— Update beneficiaries.
— Update HSA elections.
— Look at your overall asset allocation.
— Look at your finances overall.
[READ: A Checklist for Your Retirement Money]
Review Current Retirement Contributions
Have you recently reviewed how much you’re contributing to your individual retirement account or 401(k)? The 2023 contribution limits are as follows:
— The 401(k) contribution limit in 2023 is $22,500 with a $7,500 “catch-up” contribution allowed for anyone age 50 or older.
— The total contributions you can make to an IRA in 2023 can’t be more than $6,500 — or $7,500 if you’re 50 or older.
Those maximums will likely rise for 2024.
If you’re not putting away the maximum, which can be a tall order for some people, try putting in at least 1% more of your paycheck, suggests Mike Gouldin, senior vice president of retirement and wealth at OneDigital, an employee benefits consulting company.
Gouldin suggests either increasing contributions to your retirement accounts by 1% immediately or setting it up for automatic annual increases in January. A target annual savings rate should be 10% to 15% of your salary, he says.
“If you’re below this number, automatically adjusting deferrals by 1% each year is a relatively painless way to get into that target zone,” Gouldin says.
Consider Rolling Over Old 401(k) Accounts
Do you have an old 401(k) account still held in a former employer’s plan? This could be a good time to roll it over into your current employer’s plan, says Vinnie Allard, director of advisor national accounts at Human Interest, a 401(k) provider.
Allard says that from his experience, it’s fairly common for employees to leave jobs and forget about their old 401(k)s.
“It wasn’t until I came to work at a 401(k) company that I had realized I had left balances behind in plans at two previous employers,” Allard says. “When I mentioned it to my wife and asked if she had any orphan accounts and balances from former employers, she discovered two of her own. Unfortunately, the process isn’t always straightforward or easy with all providers to access the funds, as it took her some time and effort to consolidate the balances.”
[READ: What Are Unclaimed Retirement Benefits and How to Find Them.]
Update Beneficiaries
If little has changed in your life over the past year, you may not need to do a thing. But if a spouse, child or other beneficiary has come into or left your life through birth, death, marriage or divorce, for instance, you may want to add or remove a beneficiary on your 401(k) plan.
“This is critically important as the beneficiary designation determines who gets the balance of the 401(k) plan when a participant dies. Failing to keep that up to date can lead to someone other than who you actually want inheriting your 401(k),” Gouldin says.
Even if the right beneficiaries get your 401(k), Allard says there have been cases of beneficiaries waiting as long as six years before they get those retirement assets. So it’s a little like updating a life insurance policy. If you have beneficiaries to add to a 401(k), this is the time to do it.
Update HSA Elections
There are a lot of reasons you may want to make updates to your health savings account. Maybe you’ve gotten married or had a child. You may want to raise the pretax contribution amount. You may simply need to select a pretax contribution amount to continue contributing next year.
If you don’t have an HSA, you may want to consider getting one if your employer offers it and you are enrolled in a high-deductible health plan. Many people use HSAs to pay for health care expenses from year to year, but they can also fund medical expenses during retirement as long as they are “qualified medical expenses” recognized by the Internal Revenue Service.
The beauty of using an HSA to help with medical expenses is that it can be used to reduce your tax bill.
“HSAs are perhaps the single best investment vehicle available to people,” Gouldin says. “They are triple tax-free in that you get a tax deduction for the contribution, the money grows tax-free and it comes out tax-free as long as it is used for medical expenses.”
“We strongly encourage people to fund these accounts and invest the balance in the same manner they would their 401(k) balance,” he says.
Gouldin adds, “We suggest not using the money, if possible, until later in life as that allows for more long-term growth of the capital.”
Look at Your Overall Asset Allocation
Depending on your employer, you might have other investments, such as employee stock ownership plan, in your benefits portal. Consider this alongside your other retirement accounts.
Gouldin says you’ll want to make sure your overall asset allocation — how your retirement portfolio is divided up among assets, such as stocks, bonds and cash — matches your risk tolerance and is in line with your long-term goals. If not, you should rebalance your portfolio accordingly.
“We see all too often as markets move and people don’t rebalance their accounts, their investments over time become out of alignment with their risk tolerance,” Gouldin says.
Look at Your Finances Overall
Now that you’re taking a look at your benefits portal and updating your health insurance, life insurance and retirement accounts, it couldn’t hurt to also examine your budget. You may want to check in on your child’s college 529 savings plan, for example. You also might want to set up an appointment with a financial advisor.
More from U.S. News
How to Use the Rule of 55 to Take Early 401(k) Withdrawals
How to Find an Old 401(k) Plan
IRA Versus 401(k): Which Is Better?
Retirement Checklist for Open Enrollment originally appeared on usnews.com
