Protecting the Future of my 401k

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Q: Some of my money has been sitting in a 401K ever since the economy tanked. Would it make sense to take it out and invest it somewhere else, and can I do it without being penalized?

Yes the economy has tanked but it also bounced back with a resounding 20% gain in 2009. If you are in it for the long term, meaning you have at least 15 years before retirement, I implore you not to touch that 401k money. First if you do take it out, you will be hit with a 10% penalty and then owe back taxes. There won't be much left over. Plus, the tax deferred benefits in a 401k are hard to find elsewhere. What you can do is make sure you are properly diversified. This means that your investments are spread amongst different asset groups - such as Large Cap, Small Cap, International and Bonds. This is the best protection you can have to prevent your 401k from tanking too much in the future.

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