Is Your 401(k) Being Mismanaged?

Maximizing the money you invest in your 401(k) is important to your future. The choices that are made concerning your 401(k) have a drastic impact on your retirement. It’s important that you take the time to understand your own plan so you can assess whether or not your employer’s 401(k) plan manager is doing a good job preparing your future. 

Who Manages Your 401(k) Plan? 

If you work at a medium or small-sized business, it’s likely that the business owner or senior manager takes care of the 401(k) administrating. These individuals don’t typically have any financial background experience in investing. Most of these businesses want to offer the benefits of 401(k) plans to their employees, but they lack the funding of hiring an experienced financial advisor.

While setting up a 401(k) plan is fairly simple for any amateur to do, running the plan is another story. Many of the persons in charge of running these small business 401(k) plans don’t understand how to compare vendors, pick the most suitable investment menu, and other essential tasks to maximizing the earnings for the plan owner. In addition, realize that since the business owners and senior managers have many other duties as part of their job, it’s safe to say that the company’s 401(k) plans can be neglected from time to time when more important matters come up. 

Negative Impacts On Your 401(k) Plan 

Having a person with financial experience managing your retirement account is a necessity. If your account is being managed by someone with a limited financial planning background, they may be making poor choices. This could lead to investing in bad options, being charged too much from a vendor, and others. It’s important to realize that even a one percent decrease in your funding performance could equate to a large decrease in your retirement funds. 

What Should You Do? 

The first thing you should do is to become more educated about 401(k) plans. You should read over the documents you were given by your employer about your retirement account. This will help you to become more familiar with your account options, investments, and fees. 

If you find that you’re not totally happy with the design of the 401(k) plan, you have a few options. You can talk to other colleagues to see if they would be interested in approaching the company in a group setting. You can always speak to your employer about potentially changing the design of the 401(k) plans that they offer. Lastly, you can always opt to roll your 401(k) with the employer over to your own IRA account. 

Your 401(k) is a vital aspect of your future after retirement. If your account is mismanaged during your working life, it can drastically impact your ability to retire when you come of legal age. You should try to learn as much as possible about your own 401(k) account and be an active participant in setting yourself up to maximize the growth potential of your account .

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