None of these changes can be made without communicating the change to you in advance – but if you are like most folks when you get that pack of paper and the book written on recycled cigarette paper, the last thing you want to do is sit down and study it over, right Mona? So – the watchword you should take away from this is that you need to pay close attention to communications that you company sends you regarding your retirement plan. And when these choices are changed, your money is automatically moved. Seems pretty big-brotherish, but it’s still a possibility – although according to this article in the WSJ, “So far, plan sponsors aren’t re-enrolling just because they think a participant isn’t properly diversified…”.ĭefault investments can be changed on a whim as well – from a basic money market account to, perhaps, a costly stable-value insurance product. The Other KindĪnother possible way that your employer could change your allocation plan in your 401(k) account is if it was determined that your account wasn’t diversified enough.
But then again, maybe it’s just because the bossman read an article that said A shares were superior to all other investments, or something equally idiotic. So, instead of that no-load broad market fund that you originally chose, now you have a loaded (yes I know they’re usually waived loads in 401(k)’s) high expense ratio fund that doesn’t really accurately represent the total domestic equity market very well.Īnd your employer can make this change any time they want – maybe it’s to get their son-in-law an additional commission since he sold the plan. The plan sponsor (your employer) can make changes to the funds available for investment choices at any time. You see, way back in the bad old 2006’s (before all the hope and change), Congress passed the Pension Protection Act, which had a provision in it that allows employers to automatically enroll employees in retirement plans, and even make default investment choices for them.ĭoesn’t apply to me, right? Since I enrolled on my own and made my own choices for allocation of my investments… right? Once again, Mona, you’re not completely correct. (or is that mon ami?) Or at least not completely so. You’ve got this retirement saving thing by the tail, right? So you’ve set up your 401(k) with your employer’s administrator, made your allocation choices, and everything is set to go.
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