The buy-and-hold investment management strategy for a Minnesota company retirement plan is by far the most popular approach to company retirement plan account investing. But a buy-and-forget investment management strategy may be taking things a little bit too far.
The vast majority of individual company retirement plan participants that I have met with have left a company 401(k) retirement plan account at a previous employer. This is easy to do in the dramatic economic changes and ever-changing employment environment over the last few years.
If you have left an inactive company 401(k) account at your old job, you may want to give a little bit more consideration and attention to that retirement plan account now.
Company 401(k) accounts are constantly changing. The company retirement plan provider changes, the mutual fund menu of options changes, and the mutual funds that you once owned can be sold and reinvested in mutual funds that you have never heard of before.
A new client of mine was recently notified that his dormant company 401(k) account was going to be moved to a new company retirement plan provider. Each mutual fund that he currently owned was going to be “mapped over” to a corresponding mutual fund in the new company retirement plan menu.
On the date the old retirement plan closed, my client was going to own a completely different group of mutual funds in his old company retirement plan account. When I researched the new company retirement plan account options for my client, I learned that the investment objectives of the new menu of mutual funds were much more investment risk than my client was comfortable with.
I urged my client to take his money out of the old company retirement plan account before the money was moved to a new company retirement plan provider. My client transferred his old company retirement plan account to a new self-directed IRA in order to better control his retirement plan account funds.
Don’t let your previous employer take unnecessary investment risks with your old 401(k) company retirement plan accounts.
The best way to keep up with any significant changes in the management of your old company retirement plan account is to move it into a self-directed brokerage account and manage the money yourself.
Work through a financial advisor who can guide you through the process.
Ric Lager
Lager & Company, Inc.
