The first fund in your retirement portfolio should be a 401k account. It is a great tax shelter that was designed by the government. You contribute money, pre-tax and it grows until you are ready to tap it. You can do this when you retire or you turn 70.5, which ever comes first. A reason to wait until you are over 70 is the tax implications. The longer you wait, the lower your tax rate will be when you begin to draw the money.

This article will help you understand your 401k account and how to roll it over into a new account when you change jobs. A 401k rollover is not complicated but when it comes to money, people’s brains kind of shut down. Let us say you are taking a new job with a new company. You have $20,000 in your current 401k. Your HR department will ask you to fill out a simple one-page form and the money will go to a 401k rollover account. When ready, the money will transfer to your new 401k plan. All you really have to do it direct the new account in how to diversify the money. In other words, how much of the 20k goes to aggressive growth funds, bond funds and money market? You want a diversified portfolio and depending on your age and risk tolerance, you can decide how much goes where.

Some people prefer to diversify further and roll the 401k to a Roth IRA . A Roth IRA is funded with post-tax dollars, so any additional monies you add to this account will be after tax and you will not get matches from your employer. If you are young, or your 401k rollover was fairly small (under $10,000), this can be a great way to jump start your other retirement accounts. Otherwise, simply plan on funding the Roth separately starting as soon as possible.

Money doesn’t have to be complicated. If you start simple and branch out, the world of finance can be understood. Just take it one day at a time, one concept at a time and soon you will be talking like a pro!