Improve your 401(k) performance with these tips
In addition to the below tips, make sure you fully understand your asset allocation and the fees being charged. Many 401 (k) plans have fees subtracted by the firm that invests and manages your account. If you are 59 1/2 and are still working at the same firm where your 401(k) is, you may roll the funds to a self-directed IRA without any tax exposure. This allows you to select an asset allocation that might be more timely especially as you get closer to retirement age.
If you have a 401(k) at a firm where you no longer work, it can be rolled to a self-directed IRA at any time. This tax-free transfer gives you many more options for investing.
- Be Outspoken: As with all things, no one will know that you are unhappy unless you say something. While this may sound like an impossibly daunting task, tactfully voicing your complaints and concerns might make you realize that you are not the only one who has them. If other employees share your point of view, you will be able to make a stronger case when you appeal to your employer.
- Be Informed: If you aren’t well-versed in all aspects of your current 401k plan, as well as the plan (or changes to your current plan) that you would like your employer to adopt, you will not be able to argue effectively for a change. If, for example, you are interested in adding a mutual fund, call the mutual fund company you would like to have your company work with and find out everything you can about all possible choices.
- Be Involved: Your Company may be considering 401(k) plan changes right now, and if so, this is the time to make your opinions known. The average company changes 401k plans more frequently than most employees realize, and those in charge are usually open to suggestions.
- Be a People Person: Befriending the Benefits Director may be the way to see your changes implemented. While these people can seem aloof and intimidating, the chances are that they are just as aware of the flaws in the current 401(k) plan as you are. The difference is that they have greater decision making clout, and more influence when it comes to the choice of your company’s retirement plan. If you can get him or her to see your side of things, you may be well on your way to seeing your changes implemented in the future.
- Be Open to Help: If your attempt to sway the opinion of the Benefits Director didn’t work out so well, consider seeking help from an employer-sponsored group, or a union-if applicable. These groups have experience in helping employees advocate change. You may even discover that someone from the benefits department is a member of one of these organizations, which should strongly help your case.
- Be Willing to Strike Out on Your Own: If the above options fail to produce results, consider starting a grassroots movement of your own. It may sound trivial, but a petition with signatures of those employees who share your opinion that changes in the company 401(k) plan should be implemented makes an impression on the higher-ups. You will likely receive negative feedback, mostly from coworkers who don’t want to be bothered, but you are also just as likely to find out that many of your coworkers are as ready for a change as you are.
- Be Patient: Nothing happens in an instant-especially major change like the adoption of a new 401k plan. If you don’t see the fruits of your labors immediately, keep persevering until you do. Remember: the 401(k) plan that you have today will significantly impact your financial future when it comes time to retire. 401k plans are designed for the benefit of employees, so make sure that yours delivers on its promise.
Brad Pistole, a native Missourian, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Syndicated Columnists is the sole provider of this material, both written and conceptual, for this column. All rights reserved.
Trinity Insurance & Financial Services Inc. 5511 N. Farmer Branch Rd., Suite 101, Ozark, MO 65721. 417-581-9222 Brad Pistole (retirevillage.com)
