Want a plan to shout about? 'Max it out'

Take the company match and run! Over time, you might make a small fortune.

Gio Mallard did it. And so did Knute Iwaszko. Both have portfolios of more than $1 million. And in each case, the contributory-retirement plan was a key element in pushing those two individuals into the million-dollar category.

Mr. Iwaszko, who never earned more than $60,000 a year, has written about how he made his million in his book, "The 401(k) Millionaire: How I Started With Nothing and Made a Million - and You Can Too" (Villard).

Mr. Mallard, a probation officer whose highest income has been $46,000, is featured in investment manager Charles Carlson's new book, "Eight Steps to Seven Figures" (Currency/Doubleday).

Both individuals are long-term investors who, among other things, maxed-out their retirement plans.

Financial experts stress that while a 401(k) may not make everyone a millionaire, it can go far in putting a real glow on your retirement years. But experts suggest you take these steps when setting up your plan:

*Assuming you are not retiring within the next few years, invest as much as possible in common-stock funds. Stocks outperform bonds and cash investments over time.

*Again, if you have a long time frame, go with slightly more risky investments, such as technology, electronics, or speciality stocks. Also, funds with high portfolio turnover should go into the 401(k) plan to avoid capital-gains taxes. Funds with low turnover, such as index funds, can safely be kept outside the retirement plan.

*Older investors near retirement might consider shifting to bond funds, and guaranteed investment contracts that give them a set rate of return. Bonds have less risk than stocks and tend to preserve capital.

*If you have not been at your firm long enough to get into a 401(k), save the contribution on your own. Then, when you can join, increase the initial investment amount by as much as you can afford, and use what you have saved to live on. When the saved amount runs out, reduce your 401(k) contribution.

*Make the maximum contribution, not just the amount matched, says Mr. Carlson. Typically, individuals can contribute up to $10,500 this year. (Check with your employer on the exact amount.) Going beyond the match gives you a lower tax bill, Carlson notes. Meantime, money in your plan grows through compounding of interest.

*If your employer does not offer a 401(k) plan, encourage it to provide one. Getting your firm to offer even a small plan with few investment choices, is better than nothing.

Information on 401(k) plans can be found in "The Complete Idiot's Guide To 401(k) Plans," (MacMillan) or on the Internet. (Experts recommend www.vanguard.com and www.fidelity.com).

The Department of Labor's Web site (www.dol.gov) also offers advice on protecting your retirement plan.

For 403(b) plans, see the IRS document "Tax-Sheltered Annuity Programs for Employees of Public Schools and Certain Tax-Exempt Organizations" on the IRS Web site (www.irs.ustreas.gov).

(c) Copyright 2000. The Christian Science Publishing Society

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