Millions of Americans are relying on their 401(k) plans for retirement. If you’re one of them, you probably receive a monthly statement. It’s pretty likely that youdon’t do much more than glance at that statement before filing it away.

But in 2007, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) investigated over 1,320 cases of 401(k) mismanagement. That’s not 1,320 different employees with problems, by the way. It’s 1,320 different funds and companies with problems.

But how can you know if something is wrong with your 401(k)?

The primary tool you have is your monthly statement. Because there’s really no part of the 401(k) process where you have your hands on your money, your statement is your only chance to understand exactly what is going on with your 401(k) plan.

But if your statement doesn’t even make it of the envelope, it’s not going to do you much good. When you receive your statement each month, take a moment to open it up and look it over for warning signs. You will also want to compare it to your pay stubs, just to make sure that numbers match across the board.

10 warning signs

If something is going on with your 401(k), there are certain signs you can look for — clues that can help you keep an eye on your money. EBSA offers this list of 10 warning signs to help employees make sure that their 401(k) contributions are not being misused:

1. Your 401(k) or individual account statement is consistently late or comes at irregular intervals.
2. Your account balance does not appear to be accurate.
3. Your employer failed to transmit your contribution to the plan on a timely basis.
4. A significant drop in account balance that cannot be explained by normal market ups and downs.
5. 401(k) or individual account statement shows your contribution from your paycheck was not made.
6. Investments listed on your statement are not what you authorized.
7. Former employees are having trouble getting their benefits paid on time or in the correct amounts.
8. Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees.
9. Frequent and unexplained changes in investment managers or consultants.
10. Your employer has recently experienced severe financial difficulty.

What if…

If you suspect that there is a problem with your 401(k) plan, it can be difficult to prove on your own. And because ending your 401(k) participation can have a major financial impact, most experts recommend continuing your contributions unless you are absolutely sure that something is wrong.

But if you do come to the conclusion that your 401(k) plan is being mismanaged, there are actions you can take. Contact your local EBSA office and they will begin an investigation. EBSA has had significant success with handling this sort of investigation; in 2007, the agency’s work resulted in more than $51 million in restitution and penalties.

You will need, at a minimum, copies of your 401(k) statements and your paycheck stubs, to bring a questionable 401(k) plan to EBSA’s attention.

Certificates of Deposit, or CDs as they are more commonly known, have long been the go-to savings product that people depended on to grow their cash reserves. With a guaranteed rate of return, CDs are considered one of the safest and most stable financial vehicles out there. But with interest rates so low, are they still a viable option?

CDs are essentially how banks are able to make money. When you deposit your money in a banks Certificate of Deposit, you are essentially loaning the bank your cash. The bank then takes this cash and uses it to make loans to other customers in the form of mortgages, auto, and personal loans. When those loan customers make payments, a certain amount of the interest (profit) the bank makes goes back to you, the CD customer. This is the interest you gain on your money during your CD term.

Pros and Cons

One thing that differentiates a CD from other accounts is the term. CDs are not transaction accounts, therefore once you put your money into a CD account, it’s locked in there for however long the CD is written for. Usually the longer you put your money into a CD, the higher the return interest rate. The point is to basically freeze the funds so the bank can then use them to write out loans. As the bank gets paid back, part of their profit goes to you. The longer you allow the bank to use your funds, the more they’re going to pay you in interest. They want to have as much of your money in their CDs as possible, for as long as possible, so they’re going to give you better rates to keep you interested.

So what’s the problem with this approach? Your money is stuck! If you open a ten year CD at a certain interest rate, and a better one comes out the next week, or even years later, you can’t take your money out and switch (well, you can, for a hefty fee. Usually this fee is more than you would earn by switching to the higher interest rate). You then have to sit and wait until the ten years is up to get your cash. Another thing to keep in mind is emergencies. If you suddenly have a medical expense or car repair, your money is stuck in that CD.

So why invest in CDs at all? They’re guaranteed. You will never lose any of your principle to market changes or botched stock trades. You will always walk away with more money than you started with. The question is, of course, how much more. Shopping for rates can be a tedious and frustrating experience, particularly if you’re investing in shorter term CDs. You might spend forever going from bank to bank to find the best rate of return, only to have to do it all over again in a year or two when it matures. However, if you’re saving for your kid’s college fund or your retirement, it would make sense to include several CDs in your portfolio. Even if more risky investments, like stocks don’t work out and lose you money, you’ll always have a safety net in the form of your CD. Another little perk is the fact that it stops you from those impulse buys. If you want that brand new plasma TV and have easy access to junior’s college fund, you might be tempted. CDs are not only secure in terms of return, but they also save you from your worst enemy: yourself.

People looking to build and grow their money are finding it a bit difficult in the current American market. The stock market is more volatile than ever, and the impacts of those ups and downs don’t just affect our investment portfolios, but how much we pay for bread, milk, and gas every day. Investing the money we work so hard to earn in something like that is a frightening prospect, not to mention hard to do in the first place. Saving up enough money to buy stocks might take people a lot of time and effort, and when they finally have enough to buy a stock, it might plummet overnight and lose that person all their money.

While investments in stocks and international markets might be an option for people with a bit more “extra” cash lying about, most of us are saving a few dollars at a time, if at all. For people like us, these funds need to stay at least partially liquid (meaning we can spend it if we need to). We can’t wait for our CD to mature when emergencies occur suddenly and without warning. What then, is the solution?

A good ol’ savings account.

But not just any savings account. Online savings accounts, FDIC insured and high yield with limited to no prerequisites. These accounts are usually with large banks that can afford to give you much higher interest rates than so called “brick-and-mortar” institutions. But how do they work, are they safe, and where do you find them?

Is This a Scam?

Usually the first assumption made by jaded and cynical people like myself is that this is too good to be true. How can banks offer such high yield accounts with almost no minimums, and do it online? There’s a catch right? Upon further investigation, I learned there was nothing to fear. As a matter of fact, the more fine print I read, the more excited I got.

The banks that are offering these kinds of accounts are large banks, usually with very diversified interests in American markets. ING, HSBC, and Capital One to name a few. These banks have such a large asset base, they can afford to offer such high interest rates. Here is the current rundown of some online savings accounts:

• HSBC - 3.05%, no minimum balance, no fees
• E*Trade - 3.01%, no minimum balance, no fees
• ING Direct - 3.00%, no minimum balance, no fees
• Emigrant Direct - 2.75%, no minimum balance, no fees
• Countrywide Bank - 4.05%, $10,000 minimum balance, no fees
• Capitol One - 3.75%, $10,000 minimum balance, no fees

Is It Safe?

One of the first things you should look for when shopping for online savings accounts is the FDIC seal on the website. This is extremely important, as this delineates a real bank from an uninsured investment firm, or even worse, an outright scam. FDIC is insurance for your money, backed by the Federal Government. It gives you insurance on up to $100,000 for a deposit account in your name. More on FDIC insurance later.

You might ask, what about security? Most of these websites are very secure, with a lot of different password requirements. Also, in order to open one of these accounts, you will need an existing checking account at an existing brick and mortar bank. The online banks assume that your identity has been verified at your existing bank already, otherwise you wouldn’t have a checking account. In order to verify your checking account, the online bank will make two small deposits into it (a few cents each). You then need to respond back to the online bank with the exact amounts of the deposits. This is how they know your account is active and in your control (don’t get excited, they take the money back).

Sign Me Up!

Sound good to you? Shop around and see which account works best for your needs. Keep in mind the rates are variable, which means that as the markets change, so can your interest rate. Keep up to date on the latest offers so you don’t miss out.

Last week, two of my friends closed on their first home. It’s a beautiful house, great neighborhood, big yard. It’s everything they could ask for, but that perfect home is coming at quite a price.

My friends decided that now was the ideal time to buy, because home prices have dropped significantly in our area. Their logic is easy to follow: no one really knows just how low the market is going to go, so why take the risk that prices might begin to rise before they lock in that low home price? Sure, they might miss out on a significantly lower price, but then again they might not.

But, despite the low price they’ve found, my friends aren’t in a good position to buy. They didn’t save up a down payment before buying, which is usually a red flag. The mortgage crisis has guaranteed that they couldn’t get a zero-down mortgage, but they’ve managed to find the next best thing. 401(k) programs (along with some other retirement savings programs) allow you to borrow money from your account for little things like major medical expenses and purchasing a home. There are a few catches, though:

• you have to repay that money, and fast! You may have only five years to get that money back in your account or face major tax penalties.
• you lose out on any interest your retirement savings was earning.
• you often have to pay taxes or penalties on your withdrawal.

Many homeowners used their 401(k) savings to help them make a down payment, but as a general rule, it’s not a good idea. Doing so puts a person on pretty shaky financial ground: not only would you need to make your mortgage payments but you’d be making another large payment to get that money back into your retirement account. Essentially you could be putting both your new home and your retirement at risk.

Even if you’re sure that you can handle double payments, you’ll probably be better off saving up money for a down payment. Yes, you won’t get into your dream house right now, but you’ll increase your ability to keep that perfect house. And with a little effort, you may be able to surprise yourself with how fast you can save up for a down payment. You’ll have less debt overall, as well: while money withdrawn from your 401(k) is yours, the need to repay it or face penalties can turn your retirement savings from an asset into straight out debt.

My friends decided to take the risk, and that’s their — and your — choice. But piling that risk on top of a problematic real estate market seems to be asking for trouble.