Where you put your money, how you invest it, and how you handle your retirement accounts are important factors in helping you meet your retirement goals.

It you have more than one retirement plan, a very simple method to consider for allocating your dollars among your retirement plans is:

Step 1. Make contributions to employer sponsored plans that provide matching contributions.
Step 2. Contribute to other plans that allow deductible contributions.
Step 3. Contribute to a Roth IRA.
Step 4. Consider other plans to which you can make non-deductible contributions.

NOTE: Your age, tax situation now and in the future, amount of assets, etc. can all impact on the appropriateness of this strategy for you.

Invest your money appropriately for a retirement plan. For instance, don't put tax exempt investments into a retirement plan.

Administer your plans with care. For example, consolidate accounts when feasible to reduce administrative fees. Don't take possession of Rollover funds.

Some people have a choice of more than one retirement plan. For example, your employer itself might offer multiple plans, you might have an IRA, and you could even also have a plan through a business you own, such as a Simplified Employee Pension plan.

To get the most out of your retirement savings, consider using your available funds in the following order:

Step 1. Make Contributions To Employer Sponsored Plans That Provide Matching Contributions.

Some employer plans, such as 401Ks, tax-sheltered annuities and ESOPS, sometimes have a "matching" feature, which is an agreement by the employer to contribute to your plan a certain amount of money for every dollar that you put in. The amount of the match varies, but is usually between ten cents and a dollar. Your employer will usually limit the amount of its match by stopping the match after contributions reach a certain percentage of your salary.

Using the employer-matching feature is like being paid extra to save money. Once you've been with your employer long enough (usually for five to seven years), you will generally own (be vested in) all the money your employer contributes on your behalf. Under most plans, you will also own the money you contributed.

Most plans also provide for vesting (your immediate and full ownership) of all money in the plan upon retirement due to disability.

If your employer offers a plan with matching contributions, consider putting money you have available for retirement savings into that plan first, at least to the point where your employer stops matching your funds.

Step 2. Contribute To Other Plans That Allow Deductible Contributions

Some employer plans allow you to make tax-deductible contributions even if they don't have a matching feature. Also, whether you have an employer plan or not, you might be able to contribute to an IRA and take a tax deduction each year for the amount you contribute. IRAs will save you money on your current income taxes and allow the money you contribute to grow tax-deferred.

For some people, plans which accept non-deductible contributions, (such as a ROTH IRA,) might allow you to realize the highest after-tax return on your savings. Ask your accountant or other financial professional to create an illustration (a "pro forma statement") to help you choose between deductible and non-deductible contributions.

Step 3. Contribute To A Roth IRA

You also might be eligible for a Roth IRA. Depending on your individual circumstances, a Roth IRA might be even more beneficial than a traditional one. (To learn more, see: Roth IRA)

Deciding whether or not to open an IRA, and choosing between a Roth or Traditional IRA, can be difficult. Visit our IRA information to help you make that decision.

Step 4. Consider Other Plans To Which You Can Make Non-Deductible Contributions.

Some plans permit you to make contributions on an after-tax basis after you've reached the limit for deductible contributions. Check your plan to see if it's possible.

Although you won't be able to take a current income tax deduction for these contributions, you with still benefit from tax-deferred growth.

When you choose investments for the retirement plans you control, don't just look at those investments in a vacuum: consider your retirement savings and other investments together. Make sure that both groups of investments are well diversified within themselves and when looked at as a whole.

In determining which investments to use: consider whether you might need to access your money prior to retirement because of disability or other emergency needs. If so, you'll want investments that are easily converted into cash, preferably without penalty. At the same time, use investments that make the most of your plan's tax-savings features.

Here are some dos and don'ts on ways about investing your retirement funds:

• Don't place tax-exempt investments, such as tax-exempt municipal bonds or special tax-deferred money market funds, inside tax-deferred retirement vehicles. The investments will not only lose their tax-exempt status upon distribution, but will also have a rate of return that is lower than that of an equivalent taxable investment. If, upon distribution, you're going to pay tax on either investment, it makes sense to choose investments that will grow more quickly and earn more.
• Don't place tax-sheltered annuities inside of retirement vehicles. The only benefit to placing a tax-deferred investment inside a tax-deferred retirement vehicle is for the annuity salesperson that receives a commission. You might, however, consider a tax-sheltered annuity for retirement savings outside of or in addition to your other retirement plans.
• Do consider the time frame for which you are investing, as you should with any investment. Are you retiring in five years or in thirty? Might you need to access the funds in two years due to disability? Visit our Investments information for more information about investing for a particular time frame.
• Do consider putting equities that tend to generate income inside of your retirement plans as long as you don't need that income to pay your expenses. You won't have to pay tax on the interest or dividends as they are earned. The interest and dividends can be used to purchase additional investments that will in turn generate more growth.
• Do think about putting a greater proportion of assets that increase in value but don't pay dividends (such as "small-cap" stocks) outside your retirement plan. Since you won't have to pay much tax on these assets until you sell them, the increase in their value will be taxed at the capital gains rate instead of the ordinary income rate. For most people, capital gains rates are lower than income tax rates.
• Don't put investments whose value fluctuates a lot over the short-term into your retirement plan if you believe there's a good chance that you'll need to access a large part of your funds within a few years due to disability or some other emergency. The value of the investments may be at the bottom of a downswing when you need the funds and you won't have the time to wait for it go back up before cashing-in the investment.

If you have a large, self-managed retirement account, such as a 401K or IRA, consider consulting a professional for advice in investing your retirement plan funds.

Managing your accounts well can also help you increase the value of your savings. The suggestions below may help.

Consolidate Accounts

If you have more than one retirement account, consider consolidating them. This may make it easier for you to manage your investments and cut down on fees and paperwork. Be careful though. In the case of IRAs, it could actually be better to have multiple accounts if your think you might need to borrow from them at some point. (See Getting Money Out Of Your IRA.) Also make sure not to mix any "rollover" or "conduit" accounts with any others.

Minimize Fees

Even if your retirement account is "self-managed," the assets in it will still be placed with a trustee that will probably charge various fees, including establishment fees, annual fees, and transaction fees. Try to avoid trustees that charge fees as a percentage of your account or per transaction. A flat annual fee may be less expensive.

Don't Take Possession Of Rollover Funds

If you roll over or transfer funds among retirement accounts, always make sure the money goes directly from one account to the other.

If you take possession of the funds, you may be subject to income taxes and a 10% penalty tax on the withdrawal. In addition, the trustee who pays the funds out to you from a non-IRA plan may be required to hold onto 20% of the amount as income-tax withholding.

Designate A Beneficiary

Most people should designate a beneficiary on their retirement accounts rather than let the money be passed through their estate under the terms of their Will. By designating your beneficiary, the money will avoid probate. Also, your beneficiary will be able to withdraw from the account soon after your death.

Even with a beneficiary, the amount of your IRA will still be counted as part of your gross estate for estate tax purposes... unless the money is left to charity. Tax-deferred accounts are the ideal charitable gifts since no one has to pay taxes on them -- neither the estate or the charity. Leaving a tax-deferred account to a charity, and other non-deferred assets to your heirs, increases the overall amount received by everyone - including heirs and charity.

Keep Careful Records

Make at least one folder for documentation related to each retirement plan account. If it's an account in which you manage the investments, such as an IRA, it will make your life easier when it comes time to preparing your taxes if you use multiple folders, including one for each security you buy for the account.

Continue To Monitor Your Accounts

Even after you retire or go on disability and start drawing on your account, you should continue to monitor your accounts carefully.