By On behalf of The Law Offices of Roderick V. Hannah, Esq., P.A.

Employees should be protected from abuses by their employers. Companies do not always promote employee interests. This is sometimes true when an employer sets up a retirement plan system that includes a 401(k). Some experts call the system a “highly-flawed vehicle” that could damage your finances. Avoid 401(k) accounts unless you meet certain criteria.

Your company may not match the funds you put into your 401(k). In that case, you might choose an individual retirement account. IRAs are low-cost options. They can replace poorly managed 401(k) accounts. Some IRAs offer similar tax benefits as a 401(k). Research your eligibility for a deductible IRA. If your 401(k) is charging more than 1 percent every year for expenses and is stocked with under-performing funds, an IRA might be a good alternative.

If you choose to stay with your employer benefits, invest enough to get the 401(k) matching funds. You will reap a 100 percent return on the investment in the fund. You can always ask your employer to choose a better set of 401(k) funds.

People who have high-interest consumer debt should be cautious about investing in a 401(k) right away. Financial experts say it may be best to pay off your debt first. The 401(k) plan is unlikely to out-earn your high-interest debt rate. Paying off consumer balances may be beneficial in the long run.

Employment contracts that include 401(k) accounts should be carefully analyzed. Employment agreements should be fair for all Florida workers. Employees who believe their employee rights have been violated may benefit from consulting with a qualified employment attorney. These professionals can be legal allies and advocates for mistreated workers.

Source: Forbes, “When Not To Invest In Your 401(k) Plan” John Wasik, Jan. 27, 2014