How To Hack Your 401(k)

Patrick R. McDowell, CFP®, AIF® was quoted in a Forbes article by Karl Kaufman discussing how to hak your 401(k).

Today is National 401k Day. To celebrate, I asked a selection of financial experts about their best practices on how to 'hack' a 401k.

Patrick McDowell, Investment Analyst, Arbor Wealth Management, Miramar Beach, FL

Use your 401k to enable a backdoor Roth IRA contribution transaction.

You can't make a non-deductible IRA contribution and then convert just that amount into a Roth IRA if you have other traditional IRA assets outstanding.

But, if you have a 401k that allows roll-ins, you can roll your IRA into your 401k and then execute the backdoor Roth IRA transaction.

It's a lot of work to get $5,500 or $6,500 into a Roth IRA and it somewhat limits your investment flexibility but if you have a great 401k plan it can be worthwhile.

The other hack is doing what's often called a self-directed 401k where you can invest in individual securities rather than just the standard fund options available.

Despite Headwinds, Big Tobacco Stocks May Continue To Be A Good Investment

Patrick R. McDowell, CFP®, AIF® was quoted in a Forbes article by Karl Kaufman discussing big tobacco stocks.

Are Big Tobacco Stocks a Good Investment?

The question now is: was last week's earning announcement enough to send Philip Morris stock down more than 16% and Altria stock down 8%? More importantly, are they good entry points to buy, and which company is a better buy?

Patrick McDowell, Wealth Manager at Arbor Wealth Management in Miramar Beach, Florida likes Philip Morris. "If you had to choose one of the two, Philip Morris is probably the better buy simply due to the international focus. The data is always tricky but it looks like international smoking is flat to growing slightly while US smoking is slowly declining."

Another potential source of growth (though still just a pipe dream at the moment) is the burgeoning cannabis industry. With legalization nearing reality on the federal level, Big Tobacco companies have the distribution capabilities in place to package and sell marijuana once it's officially legal. "Imagine Marlboro Reds next to Marlboro 'Greens' at the gas station!" joked McDowell.