Q: Should I stop putting money in my 401(k)?

A: The answer to this question depends to a large degree on your personal situation, i.e., specifically how close you are to needing the funds in your 401(k). It takes an average of three years for the stock market to recover from a bear market, and we’re clearly not at the end of this one yet. So, if you’re close to retirement, you may be better off putting new money into short-term CDs for the next three to six months instead of contributing to your 401(k); if you’re farther from retirement, your 401(k) will have time to recover and continue to grow. One of the benefits of a 401(k) is that the taxes you pay on the money that you contribute are deferred until you start taking distributions in retirement, so keep that in mind before making any changes to your contributions.

And speaking of tax considerations, taking money out of your 401(k) will leave you with a big tax hit, so leave the money you already have in there alone unless you have absolutely no other alternative. Otherwise you could end up being socked by a double whammy between the stock market upheaval and the IRS.

Next: Is my money market mutual fund safe now or not?