When you work for a company, there are all kinds of benefits your human resources department lines up for you.

[ad#Google Adsense 336×280-IA]Health insurance, 401(k)s, health savings accounts, life insurance and disability insurance are just a few benefits you may receive – particularly if you work for a medium- to large-sized company.

Of course, when times got tough a few years ago, many companies cut back on benefits.

Employees were required to contribute more, especially to health insurance.

Nevertheless, benefit programs have become increasingly flexible.

And there are several hidden gems among these plans that can save you gobs of money.

Even if you think you have a good handle on what your company offers, you may not realize just how much you can manipulate these benefits to your advantage.

The Self-Directed 401(k)

Years ago, I worked for a financial media company that offered a 401(k). I was disgusted by how bad the mutual fund options were. It was clear that our human resources manager knew nothing about investing… that he had been sold a package of funds that would generate the largest commission for the broker who put the plan together.

These funds had high fees and weren’t particularly diversified. So I offered (and begged) to look over available funds the following year when our plan was up for renewal.

I was turned down and was stuck investing in expensive, underperforming funds. But if that were the situation today, I’d be able to have more control of my retirement funds. My company – and about half of all businesses that have 401(k) plans – offer self-directed 401(k)s in addition to traditional plans.

A self-directed 401(k) allows you to buy stocks, bonds, ETFs and other investments within your 401(k). So you’re not limited to the mutual funds your benefits manager chooses.

Over the long run, this can actually end up being cheaper than a traditional 401(k). For example, let’s say you have $100,000 worth of your 401(k) invested in mutual funds. Let’s also say those funds average a 1% annual expense ratio and match the market’s total return. That means you’re paying $1,000 in the first year to the mutual fund companies (and more after that as your account grows).

If you’re in these funds for 10 years, you’ll have paid about $16,211 over that time frame.

If you instead bought 10 stocks in a self-directed 401(k), paying a commission of $10 each, you’d pay $100 the first year. And, assuming you held those stocks for 10 years, like you did with the funds, you would never pay a penny more. Even if you reinvest the dividends.

If you rotated out of one stock per year, you’d still pay a mere $280 in commissions versus the $16,211 you’d pay in the funds.

Total Savings: $15,931 over 10 years

Max Out Your HSA Early

An HSA is a health savings account. Like a 401(k), you contribute pretax money. But those funds can be spent on only healthcare-related expenses. The benefits of contributing to an HSA is it lowers your taxable income. Plus, by paying with pretax dollars, it’s like getting a 34% increase in the value of those dollars.

To the first point, if you make $75,000 per year and contribute $5,000 to your HSA, you will be taxed on only $70,000 in income. Right off the bat, you’re saving approximately $1,250 in taxes.

Just as importantly, if you have an expense that you’re paying with pretax dollars, you’re getting far more bang for your buck. You may think, “It’s $1,000 out of my pocket either way. What’s the difference?” Well, in order to pay a $1,000 expense with after-tax dollars, you’ll actually need to earn closer to $1,335.

HSAs also tend to be flexible. You usually have to sign up by a deadline, but once you do, you can alter your contribution at any time. For example, say you’ve decided to contribute $1,000, but then need $2,000 worth of unexpected dental work. You can contribute an additional $2,000 to your HSA, either throughout the year or as a lump sum taken out of your next paycheck (assuming your paycheck will cover it).

You can also alter your contribution schedule. Here’s an example: You’re contributing $5,000 over the year to your HSA. As of May, you’ve already contributed $1,700 (leaving $3,300 still to be added). You find out your kid needs braces and, if you pay the entire cost up front, you’ll receive a $500 discount.

You can request that the remaining $3,300 be taken out of your next one or two paychecks. That way, your entire year’s contribution is in your account to pay the orthodontist.

The best part? Now you’re paying with pretax dollars and receiving the discount.

Of course, you have to be able to afford having a big chunk of money taken out of your next check or two. The good news is, if you can, your future paychecks will be a bit higher since you are no longer contributing to the HSA.

One more thing…

If you contribute to an HSA, many employers will also kick in $500 or $1,000. So, assuming you contribute $5,000 (which is money you may very well have to spend on healthcare anyway)…

Total Savings (for individuals in the 25% tax bracket): $12,500 over 10 years

Gym Memberships

Some employers pay for gym memberships or at least enable you to get significant discounts. It may be at specific gyms the employer or health insurer has an agreement with. But if that’s not convenient for you, talk to your benefits manager and see if you can get the discount applied to your current gym.

The average gym membership in the United States costs about $40 per month. If your company can get you a 50% discount or reimburse you for half the cost, that comes out to $20 per month – or $240 per year.

And, of course, if you actually use the gym, there are all sorts of nonfinancial benefits that come with it.

Total Savings: $2,400 over 10 years

All told, these three benefits, which many businesses offer their employees, can save you $30,831 over 10 years. If you’re not already taking advantage of these offerings, talk to your human resources manager to see if they’re available.

Otherwise, you’re spending over $3,000 per year that you don’t have to.

Good investing,

Marc

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Source: Investment U