Here are the 20 worst mistakes that investors make with their 401(k)s:

Please see below where I was quoted in an article in the Morris County Daily Record:

Sunday, April 1, 2007

Here are the 20 worst mistakes that investors make with their 401(k)s:
Not contributing to a 401(k).

"By far, the worst mistake is not contributing,"says Claire E. Toth, JD, CFP, of Point View Financial Services in Summit. "As a minimum, contribute enough to get the full employer's match. Typically, your employer will match 3 percent if you put in 6 percent of your salary. That's making 50 percent on your investment, guaranteed. You wouldn't leave 3 percent of your salary on the table, so don't leave the employer match, either."
Not contributing enough.

The average investor contributes 8 percent or 9 percent. Experts recommend 15 percent for medium- to high-income employees.

"Ideally, you should contribute the maximum you can, which is $15,500 this year for most people and $20,500 for people 50 or older by the end of the year. Your contribution is untaxed, so Uncle Sam is helping you out," Toth says.

"They do not enroll as soon as possible,"says James F. Christie, CFP, of Freedom Wealth Management in the Basking Ridge section of Bernards. "Less than 45 percent of men under 35 invest in their company's 401(k)."

Not having a diversified portfolio.

"When I look at 401(k)s, the mistake that stands out like a sore thumb is a frightening lack of diversity," says Jo-Ann Gallerstein of JG Advisors in Morristown. "Most folks stick with the perceived safety of what they know best -- large U.S. growth stocks -- at the expense of adding funds with small, value and international companies.

"Investors have no better ally than diversity to cushion market plunges and to increase their return."

Not deciding on an asset allocation: what percentages you have in various types of investments.
A crude rule: Take your age and subtract it from 100. That's how much you should have in the stock market.

Failure to rebalance.

Every so often, check your asset allocation. If you decided on 60 percent in stocks and 40 percent in fixed income and you're now 70 percent in stocks, cut back your contributions so you're back to 60 percent. Unless you have decided to become more aggressive (maybe you won the lottery) or more conservative (you're getting older).

Not considering your partner's 401(k).

Patricia Q. Brennan, CFP, of Rutgers Cooperative Extension says, "One of the big mistakes I see is people not treating all of their investment money as a single pot of money and dividing it up accordingly.
"If each spouse makes a separate decision about diversification in his or her own accounts, the combined investments might not be appropriate for both of them -- or even make sense.
"Instead, treat your investments as if they were one portfolio. Think of it as a single investment 'pie,' where each of you are contributing the 'slices' (large cap, small cap, international, bonds, etc.).
"One spouse might be more conservative than the other. Therefore, the wife, for example, could provide the fixed-income investments and the husband contribute the stock 'slices' to the pie.
"Bottom line, always think 'total portfolio.'"

Being too conservative.

Studies have found that most 401(k) investors fall into one of two camps: the excessively conservative, who have nothing in the stock market, and the excessively aggressive, who have 80 percent or more of their money in the stock market.
Sheri Ianetta Cupo, CFP, of Sage Advisory Group in Morristown has seen investors who park their money in a stable-value fund until they feel more comfortable about the current market. They wait and wait and wait. By the time they feel comfortable, they have missed a lot of gains.

Being too aggressive.

These people may just be antsy. "They are constantly changing the investments in their 401(k) based on the current 'market buzz,'instead of looking at a longer time horizon," Christie says.
Then there are investors who think that the stock market keeps going up and up. They don't know that from August 1929 to June 1932, the Standard & Poor's 500 lost 83 percent of its value.
Some investors are too aggressive because they think it's a competition.
Ted Benna, an insurance agent who created the first 401(k) plan, says, "The major issue is having enough when you retire, not whether the value of your investments went up or down today."

Buying whatever is hot.

This is sometimes known as "shooting where the rabbit was."
A corollary is selling whatever is cold. Both strategies lead to buying high and selling low.
Not updating your beneficiary designation.
Steven Kaye, CFP, of Watchung reports that one woman finally checked her named beneficiary and found that it was her first husband, not her current fiancé.
Not complaining if your plan needs improvement.
"If I think that my clients have a 'bad' plan, I explain why so they can lobby their employer for improvements," Cupo says. "Bad plans have expensive fund choices, very limited fund choices (ignoring major asset classes), little or no match, a match only in company stock and so forth."
Choosing everything.
Cupo says, "I've seen some people put an equal percentage in each of the fund choices, thinking that this creates a balanced portfolio." Heaven knows what mess the investor may wind up with.
Having too much money in company stock.

Michael Green of Wechter Financial Services in Parsippany says, "One of the biggest mistakes in recent history was the investment of Lucent employees in Lucent stock. As the telecom boom began melting down in mid-2000, Lucent lost 99 percent of its market value and three-quarters of its employees. Many of those employees had socked away years of hard-earned money into Lucent stock. Now they not only didn't have their jobs with Lucent, but they didn't have most of the money they had saved for retirement.
"I stood in front of a room full of these employees and tried to help them, financially, in any way I could. Many of them broke down crying as they realized they would not be retiring for many more years than they planned."
Some observers think that 10 percent of your 401(k) in company stock is the high limit. Other suggest: nothing.

Not increasing your contribution when you can.

Benna says, "Assume you contribute 2 percent of your pay to your plan and get a 4 percent raise. Increase your 401(k) from 2 percent to 4 or 5 percent before you get used to seeing this additional income in your paycheck."
Spending the 401(k) money when you leave the company.
Benna asks, "Is having a new car (say) worth having to work for another 10 years?"

Withdrawing money for a financial hardship.

It had better be a darned serious hardship. Any money withdrawn is taxable and subject to a 10 percent penalty tax if you are younger than 591/2.
Typically, 30 percent to 40 percent of the money withdrawn is lost to taxes, Benna says. Also, your nest egg may shrink drastically. For example, if someone age 35 withdrew $10,000, it would have grown to more than $132,000 by age 65 if invested at 9 percent a year.

Keeping your money with your employer when you leave.

Jerry A. Miccolis, CFP, CFA, of Brinton Eaton Wealth Advisors in Morristown says, "A big mistake is keeping the 401(k) (with your employer) after you leave employment -- instead of doing a tax-free rollover to an IRA, given the relatively higher (and often deeply hidden) costs inside a typical 401(k)."
But it depends on the particular plan. "Rolling over to an IRA isn't necessarily a good thing if you are in a high-quality plan with negotiated fee levels," notes Kristi Mitchem, head of Barclays Global defined contribution business.

Borrowing from your 401(k) without good reason.

Benna warns: You must repay the loan. And stopping contributions to the plan while you repay the load will seriously reduce the amount you will save for your retirement. The losses are even greater if you miss your matching employer contributions. And if you leave your job before repaying the loan, the unpaid balance will be taxable.

Not asking for help.

Men, in particular, prefer to do things themselves -- and relatively few would dream of asking a financial planner for guidance.
By the same token, men don't like to ask for help when they're driving and they're lost, Brennan says. She adds: "Why does it take 10,000 sperm to fertilize one egg? None of them will stop to ask for directions."
-- Warren Boroson