Your Best Moves When an Employer Switches 401(k)s
NEW YORK (TheStreet) -- Everything about your 401(k) is going along just fine -- you've selected your funds with care, contribute all you're allowed, get the boss's full match and avoid damaging moves such as borrowing from the account. Then, all of a sudden, you're thrown a curve: Your company switches to a new provider.
In a perfect world, your company has a good reason for the switch, such as reducing fees or improving the plan's offerings. But in the real world, the change may, for one reason or another, be better for your boss than for you. Or a new plan that is perfectly good for most of your coworkers might not suit you as well as the old one.
In any case, a change in provider means you should to a little sleuthing to make sure there have been no glitches in your account and that your new funds are the ones you really want."If your company is changing 401(k) providers, you've probably been assured that the transition will be seamless, and from a superficial standpoint, it may well be," says Christine Benz, director of personal finance at Morningstar, the investment-information firm. target-date fund designed for a retirement starting in 20 years. Your old provider might have a large stock allocation after that target date arrives, while the new one might be more conservative. You need to know. roll them over into an IRA, which would allow you to invest in just about anything you want. Short of that, you could consider reducing your contributions to the 401(k) and increasing investment outside the plan. Unfortunately, this could mean sacrificing some of the tax deduction you enjoy with 401(k) contributions. Unless the new provider's offerings are truly toxic, you should probably continue contributing at least enough to get your employer's full match.
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