I got the following tips in an e-mail from the PR guy of Ben A. Jacoby, CFP and thought it was worth passing along. Jacoby lists the three big mistakes that people make with 401(k)s and other retirement-plans:
 
1) Managing retirement-plan investments in isolation.  Many people look at their 401(k) plans, IRAs and other retirement plans as separate entities instead of integrating them with their total portfolio, says Ben A. Jacoby, CFP, of Brinton Eaton Wealth Advisors.  “So they don’t position the right assets in their plan,” he says.  Suppose you decide to allocate 10% of your overall investments to real estate investment trusts.  Because their high dividends are taxed at your marginal tax rate, your [Real Estate Investment Trusts, or REITs] probably should go into a retirement plan.  “You might have 25% of your 401(k) in REITs but that would be acceptable if it gets you to your 10% overall target,” he says.  Conversely, investments that produce long-term capital gains generally are best positioned outside of a retirement plan.  “Look at the whole picture and then allocate across the appropriate accounts accordingly.”
 
2) Ignoring high fees.  In some 401(k) plans participants pay up to a whopping 2.5% as an expense level.  “And these fees are often very well hidden, but still impair your return,” Jacoby says.  If your plan is fee-heavy, move your money to a rollover IRA as soon as possible —and agitate for change in investment options at your employer, he says.
 
3) Believing you can’t touch the principal in retirement.  Suppose you need to withdraw 5% a year from your plan once you’re retired.  Many people think that they must earn the 5% withdrawal from interest and dividends, and therefore load up their plan with bonds, forgoing growth investments. “They don’t achieve appropriate allocation,” Jacoby says.  But as part of your annual withdrawals, you can also sell individual holdings and use the proceeds.  Over the long term, a conservative balanced portfolio should return about 7% to 8% a year, so 5% withdrawals are supportable, with some portion coming from the sale of securities as part of the process of periodic rebalancing of your assets.

All good advice.