Fall for Free Money, Part One

Fall is my favorite time of year. The leaves turn red and orange, the weather turns brisk, and it's finally time to throw a couple logs on the fireplace.

It's also the season of open enrollment. (No, not open season. That's deer hunting.)

You know, it's the time of year when Human Resources starts sending those long and really confusing email memos. They're the ones you started to skim and then dropped, promising yourself that you'd get to them later.

But later never comes, not until you get that final, extra-urgent, red-lettered, exclamation-point-filled email warning, "Deadline for open enrollment tomorrow!"

We'd all get more excited about open enrollment if it was called something more interesting, like maybe the Carnival of Free Stuff. That's a better description of what open enrollment -- the time when employers let their workers join, drop, or revise their benefits packages -- can mean for many workers.

Many jobs offer benefits that can save a few dollars, reduce your taxes, and maybe even cut your commuting costs. But it's up to you, as an employee, to figure out which programs can benefit you. Here are some benefits we hope will inspire you to find the time to pour a cup of coffee and start reading those HR memos.

Free money
Yes, even the stingiest employers, the ones who buy the cheapest office supplies and ration toner cartridges, probably offer their workers free money. It's not a holiday bonus; it's a matching contribution to a retirement account called a 401(k).

If you're a relatively new employee, open enrollment may be your time to sign up for your employer's retirement benefits. If you're a seasoned old hand, and you have that three-year anniversary calculator to show for it, open enrollment is a good time to review your 401(k) strategy.

Most 401(k) plans come with the biggest working perk of all, and that's not free coffee. Many employers match some of the contributions made by the employee. That's right, they'll give you free money for doing something you should be doing -- saving for retirement. That means Fools should do everything they can to contribute at least enough money to get the maximum contribution from their employers.

Open enrollment is a great time to review your contributions and see whether you can stash away a little bit more. If you're worried about taking a bite out of your paycheck, remember that you'll see more money appear in your 401(k) savings than you'll lose on payday. That's because the money saved is put away before taxes. If you took the money as income, you'd pay tax immediately and have less to show for it.

This year may also be the first time that your employer offers Roth 401(k) accounts. They work like Roth IRAs, and you can read all about them here.

Smaller businesses and nonprofits may offer retirement plans with different names but similar benefits. This is where you'll have to get familiar with all that paperwork that the friendly human resources people make available to their employees.

If free money hasn't convinced you, or you need some help figuring out what to do with the money now that you've started saving, take a look at the 401(k) Center.

The elixir of health
It's a rare employee indeed who isn't being asked to shoulder more of the burden for their health benefits, but health insurance remains one of the biggest perks of gainful employment. Open enrollment is the time to review your health coverage and make sure you have the benefits that best fit your needs.

One easy way to save costs is to make sure your family doesn't have duplicated health benefits. In families with two working adults, it's usually cheaper to put everyone on a family plan. It's worth a few minutes to compare your plan with your spouse's and find out which is less expensive. Changed benefits or higher costs could make it worthwhile to switch.

If you're recently married and forgot about health insurance among the fluster of catering appointments and thank-you notes, now's the time to add your new spouse. Similarly, if you've divorced, it might be time to go back to a single's plan.

Then take a look at the options. Look at all the costs associated with each plan, including deductibles and prescription fees. Even if you pay less with each paycheck, a different plan may be more expensive if you end up with more out-of-pocket costs.

A few companies are starting to offer plans that combine high-deductible health insurance with health savings accounts. It's a relatively new idea, which lets people with high-deductible plans stash away money for health costs in a special tax-free account. More about those accounts can be found here and here.

This is one arena where the sheer volume of information, and the fact that it all reads like it was translated from the original Dutch, can make a person's head hurt. It might be worth asking some co-workers about their experiences with different health plans. Just make sure you're prepared to hear a little too much information about your colleagues' aches and pains.

Interested in learning more about open enrollment season? Check out "Fall for Free Money, Part Two."

For related Foolishness:

For more tips on how to get the most out of every paycheck, try the Fool's new personal-finance newsletter,GreenLight. It's full of practical advice on how to make more money, keep more money, and make your money work harder for you.

Fool contributor Mary Dalrymple welcomes your feedback. The Motley Fool has a beneficial disclosure policy.


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