Question: I recently got a second job working nights and weekends. I currently contribute to the 401(k) plan for my "day" job. I don't make enough money on that job to get even near the maximum yearly ceiling for saving to a 401(k).

My second job employer said if I work 25 hours a week I can participate in the 401(k) plan. Am I correct that it's OK to participate in more than one 401(k) plan at a time? Am I also correct in believing that my only restriction is to not exceed the 401(k) dollar savings ceiling each year?

TB: You're correct that you may contribute to more than one 401(k) plan at the same time as long as you don't exceed the $10,500 annual maximum limit. I applaud your work ethic. Hopefully the additional income and savings will enable you to build a large enough retirement nest egg so that you can ultimately retire comfortably.

Question: I've reached pension eligibility, with $316,000 in a lump-sum pension option and $290,000 in my 401(k) account. I'm 51 years old, with marvelous health, attitude etc. My husband and I have no consumer debt, and do have medical benefits with retirement. He will retire in seven years. We have a lovely home with manageable mortgage. I am a minimalist. With my husband's support, I estimate I'll need about $33,000 yearly to be comfortable. Is there any way this $600,000 will be enough to afford me not to have to go back to work?

TB: You have done well. Congratulations. Very few people who want to retire at age 51 have accumulated enough for this to be a reality but you seem to have done it. I normally advise 51-year-olds to keep working because this is a very young age to retire. There is a reasonable probability that you will live for another 30 to 40 years unless you develop a serious medical problem.

The leading concern I usually have is that over such a long period of time, inflation can erode a lot of one's retirement income. For example, at a modest 3 percent inflation rate, you will need $79,860 of annual income 30 years from now to provide what $33,000 will buy today.

Five years ago I wrote a book, Escaping the Coming Retirement Crisis, which contains tables to help individuals know whether their retirement nest eggs are large enough. The key factors for making this determination are: (1) how long will you need the income, (2) how will you invest the money during your retirement years, (3) what will the inflation rate be during your retirement years and (4) do you want anything left for heirs and/or a cushion.

You should also assume the following:

1. You need income for 35 years,

2. The inflation rate is 3 percent,

3. You don't plan to leave anything to your heirs, and

4. You are a moderate investor during your retirement years.

You will need $18.12, today, to provide $1.00 of inflation-adjusted income for 35 years using these assumptions. This means the $606,000 you have accumulated will provide $33,440 of inflation-adjusted income over a 35-year period. It's assumed in this example that, as a moderate investor, you will invest roughly 50 percent in stock and 50 percent in fixed-income investments during this 35-year period.

Based upon the above assumptions, the nest egg you have accumulated should be adequate because you will be able to reduce the amount you withdraw from your retirement savings when you start to receive Social Security benefits. Social Security should give you an adequate cushion if inflation is higher, you live longer than 35 years, and/or you don't achieve the investment return that has been assumed.

Working a few more years should give you an even bigger cushion. For example, if you work another three years, your nest egg should be at least 20 percent larger and you will need the income for three less years. The great thing is you have placed yourself in a position where you have choices.

Question: I live in Wisconsin, which requires me to make my husband the beneficiary of a 401(k). I've been separated from my husband since 1993. I can't afford a divorce. I believe he lives in Florida. Is there some way to make my son the beneficiary of my 401(k) plan without having to find my husband to sign papers agreeing to this?

TB: You may name your son as your beneficiary but your husband will be able to claim the benefit if he decides to do so after you die. The only way to avoid this possibility is to have your husband waive his right to receive this benefit. Perhaps the Social Security Administration or some other governmental agency can help you locate your former spouse. You should contact the office of your Congressional representative to see what help they can provide.

Question: Where can I get detailed 401(k) plan data for various Fortune 500 employers' plans so I can compare them when changing jobs? It seems SmartMoney magazine had such an article at one time but I can't find it on their site.

TB: Several magazines have provided such summaries. I helped Money magazine do such a study several years ago. I think the SmartMoney one was done about five years ago.

I recommend evaluating the total compensation package when you are changing jobs, including salary, incentive pay, stock options, benefits, etc. Magazine studies typically compare only one thing such as the 401(k) plan. When I helped Money magazine, I told them a company's entire retirement package should be considered rather than just the 401(k).

For example, I helped a company redesign its retirement program a couple of years ago where the matching 401(k) contribution was only $0.10 per $1.00 of employee contribution. This company would have ranked low on a survey that compares only 401(k) plans. This company also has a deferred-profit-sharing plan where the company historically has contributed 10 percent or more of each employee's pay. The combination of the 401(k) and the profit-sharing plan is far superior to just a 401(k) with a more attractive match.

Question: The company I work for was bought out by a larger company. The old company decided to terminate the 401(k) plan. We're still waiting for our money; it's been nearly a year. We've been promised it since last fall. Whenever the administrator is questioned about the delay, it says 'it's in the IRS's hands.' When we contacted the IRS, they say they don't have it.

Is there a limit to how long this money can be held after a plan is terminated? What can I do to find out the status if the administrator won't cooperate and offer any information?

TB: When a plan is terminated, it's advisable for the employer to seek IRS approval of the termination because this protects the tax benefits of the participants and the employer. It commonly takes six months to a year to receive IRS approval. It's not advisable to distribute benefits until the IRS issues its approval. There isn't any time limit placed on the IRS. They can take as long as they want to issue their approval. Retirement plan approval requests are handled by a special branch of the IRS, which commonly shifts plans from office to office based upon workloads. As a result, I wouldn't place a lot of significance in the fact that someone at the IRS has told you they don't have your former employer's plan.

Frankly, there isn't much the administrator can tell you if the plan is sitting at the IRS to be reviewed. No one has any influence over the IRS's schedule. I recommend continuing to keep after the administrator. You may also want to inform the administrator that you will ask the Department of Labor for help if the funds are not distributed by a specific date, such as the end of September.

Question: Soon I'll be 70ý and must begin taking mandatory withdrawals. Where can I get information on how to figure the least I can withdraw?

TB: There are several alternatives if you want to do this on your own. One is to go to your local library or a law library and review this section of the Internal Revenue Code and the applicable regulations. CCH Publishing Company's Journal of Retirement Planning is also a good source. Another possibility is to ask the organization where your money is invested for any information they have for available on this subject for their customers.

The laws and regulations governing minimum distributions are pretty complex. You may want to have the organization that holds your retirement savings compute the amount you need to withdraw. Most of these organizations have staff members who are familiar with this area of the law.

Ted Benna, creator of the first 401(k) retirement savings plan, will answer your most intriguing questions every Tuesday. With over 30 years of experience as an employee benefits consultant, Ted is a nationally recognized expert on benefits issues. He has authored two books, Helping Employees Achieve Retirement Income Security and Escaping the Coming Retirement Crisis, and is President of the 401(k) Association. Ted is a frequent speaker at meetings of 401(k) plan sponsors and participants. His articles and comments have appeared in numerous publications, including The New York Times and The Wall Street Journal.

Read Ted Benna's Biography

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The information provided here is intended to help you understand the general issue and does not constitute any tax, investment or legal advice. Consult your financial, tax or legal advisor regarding your own unique situation and your company's benefits representative for rules specific to your plan.

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