Bumper stickers I’d love to see: “I’d Rather Be Managing My 401(k)” and “Honk if you love your IRA.” Made you snicker? I agree. Most of us have better things to do with our time than planning for retirement. You probably wouldn’t rather be managing your retirement accounts — you’d rather take in a movie, watch a ball game, or pursue your favorite hobby. But it’s hard to enjoy yourself if you’re plagued by a nagging worry that you could end up destitute in retirement. Spending some time thinking about and planning for your retirement can pay you big dividends down the road.

The concept of retirement has changed dramatically over the last decade or so. Social Security seems less than secure, and it was never meant to cover all your retirement needs, anyway. Most people can’t count on receiving a traditional fixed pension from their employer. The burden of retirement planning falls squarely on your shoulders at a time when you’re living longer and need more money to finance retirement.

I have good news for you. Although you do have to take responsibility for your own retirement saving, you don’t have to let retirement planning take over your life. Investing a bit of time now in ways I explain in this book should enable you to eventually sit back and relax.

There are lots of places where you can find basic information about all the different types of 401(k) and IRA plans, but finding insight into which one may be best for your business is challenging. I include that in this book. I also include ways I have found to utilize these plans to provide benefits comparable to a 401(k) without all the fees and complications of a 401(k).

About This Book

Don’t let the title fool you. 401(k)s and IRAs For Dummies is a useful book that explains the basic rules — and even some obscure ones about various retirement account options. I include information that’s completely up to date, including new rules that went into effect in 2020 with the enactment of the Secure Act, which adds some benefits to 401(k) plan participants. The CARES act was passed in 2020 in response to the COVID-19 crisis.

This book explains essential 401(k) and IRA rules in easy-to-understand language so that you can manage your retirement accounts in a way that leaves you better off in the long run.

This book also explains how to manage risk in your investments and minimize the chances of big losses.

I give examples to show why you should start saving for retirement as soon as you can, because the longer your money stays in your 401(k) and IRA, the bigger your potential nest egg. In fact, if you take only one message away from this book, I hope that it’s “Save as much as you can as early as you can, and invest it sensibly.”

I explain basic principles of long-term investing to help you decide which investment options are right for you. I also give you guidelines to figure out how much you need to save for retirement, and then, after you retire, how to manage withdrawals from your accounts so that your money can last. These are important concepts for 401(k) and IRA investors, but they’re equally important for everyone else.

I have to say this loud and clear: Nothing in this book should be taken as tax advice or investment advice for your specific situation. Everyone is unique, and all I can do is explain some of the more important rules and give you guidance to help you make your own decisions.

Also, because the rules are so complicated, I explain the general rules but leave some of the more technical exceptions to your own expert advisors. I know that most people want someone to tell them exactly what to do, but our lawyers won’t let me do that. You need to consult an investment advisor or tax advisor for advice on your specific situation. But rest assured, reading this book will help you understand the advice that you receive and may save you money by enabling you to have fewer and shorter meetings with your advisors!

I explain things in a way that’s easy to understand; I go into as much detail as necessary for a basic understanding, but no more, and I refer you to additional resources. And heck, I created the first 401(k) plan. How much more authoritative can you get?

To make the content more accessible, it’s divided into six parts:

• Part 1, “The ABCs of 401(k)s and IRAs”
• Part 2, “401(k) Basics”
• Part 3, “Here Come the IRAs”
• Part 4, “Saving and Investing”
• Part 5, “Money In, Money Out”
• Part 6, “Helping Small Employers”
• Part 7, “The Part of Tens”

I think the titles are pretty self-explanatory, but if you’re wondering what a Part contains, check out the Part Page at the beginning of that Part for a quick glimpse of the contents.

Foolish Assumptions

This book is for readers who are either thinking about participating in a 401(k), IRA, or other retirement plan, or who already are participating in a retirement plan but have doubts about what they’re doing. I assume that you have an idea that it’s important to save for retirement, but you’re not sure whether you’re doing it right or how to get started.

You may also be self-employed or a small business owner looking for options for your own retirement plan and to start a plan for your employees.

I try to make things as simple as possible, but I can’t avoid throwing in some math. I assume that you understand some basic economic principles, such as inflation and earning a return on an investment.

For more information about the general investing concepts I cover, I recommend the latest editions of Investing For Dummies and Mutual Funds For Dummies, both by Eric Tyson (Wiley Publishing, Inc.), as well as other resources listed throughout the book.

Icons Used in This Book

Throughout this book, you’ll find helpful icons that highlight particularly useful information. Here’s a quick rundown on what they all mean.

Pay attention to this because it may save you time, money, or aggravation.

Importantissimo. Commit this information to memory.

Ignoring this information may result in painful financial consequences.

You don’t have to know this detailed information, but it wouldn’t hurt. Skip it if you’re in a hurry or not interested. (There aren’t many of these.)

Beyond the Book

In addition to the abundance of information and guidance related to retirement plans in this book, you get access to even more help and information online at Dummies.com. Check out this book’s online Cheat Sheet for fun and helpful additional information. Just go to www.dummies.com and search for “401(k)s & IRAs For Dummies Cheat Sheet.”

Where to Go from Here

The beauty of 401(k)s & IRAs For Dummies is that I’ve organized it so that you can start reading anywhere without risking total confusion. Here are a few suggested starting points, depending on why you picked up the book.

• If you’re completely new to the subject, start at the top with Chapter 1 to get an overview of retirement saving and plans.
• If you’re changing jobs and want to know what to do with the money in your employer’s 401(k) plan, head to Chapter 7.
• If you need to take money out of your 401(k) for an emergency, to put a down payment on a home, or to pay for college expenses, you can find information to help in Chapter 14.
• If you’re just starting to realize the need and benefits of saving for retirement, go to Chapter 11.
• If you need knowledge about investments and investing, Chapters 13 and 14 are the place to go.
• If you’re entirely happy with your retirement fund and the investments in it, give a copy of this book to someone who isn’t!

Something else you’ll find in this book that you probably won’t find elsewhere is the section on retirement plans from an employer’s point of view, with tips for small-business owners on choosing a plan. This isn’t easy because there are so many options.