When Your 401(k) Makes A Change On You

In the past year, many of our clients have seen changes made to their 401(k) plan.   These changes may happen from two separate businesses merging, your employer trying to save costs, or simply a change of funds within the existing 401(k).    Usually, you will get either an electronic or written notification of these changes.   The problem is that most 401(k) participants usually don’t take the time to read the changes which can affect the overall performance of your largest retirement asset.   Here are three things to watch out for when a major change gets made to your 401(k) plan.

  1. Be aware of the mapping process –  The idea of having a map or a Garmin is to get specific directions on the most efficient way to get from point A to point B.   When your existing 401(k) plan merges into a new 401(k) plan it will go through a process called mapping.  What generally happens is that the new 401(k) provider will offer mutual funds that most closely match the existing mutual fund positions you have today if you do NOTHING when the change happens.   Remember, you have the opportunity to review and select a set of new funds based upon the new choices in the 401(k) plan.  However, if you elect to make no changes at all your existing 401(k) will automatically be redistributed into like kind funds.   I stress the word like kind because the funds will not likely be exactly the same nor will the funds necessarily have the same exact fund manager.   It is important when these changes happen that you reassess each and every choice within the new 401(k) plan.
  2. Be aware of the blackout period – When a complete overhaul happens with your 401(k) from your old plan to a new plan, it will go through something called a blackout period.  This is a period of thirty days where you won’t have the ability to make any changes to your current overall investment mix.   With today’s extremely volatile market, you could consider moving your entire balance to a money market or stable value choice if you feel uncertain about market volatility during that period of time.   If you are not confident in what choices to make with the new funds, creating a more conservative mix of your 401(k) will also allow you time to make more informed choices within the new plan.
  3. Be aware of a fund manager change – Remember, that each mutual fund within your 401(k) plan is either run by one manager or a team of managers.  Some funds over time develop a very consistent track record of performance.   However, if there is a change of managers on the mutual fund the historic performance may not represent what might happen in the future.  When you analyze your mutual fund selections you should not only look at the track record of the fund (which many people do), but you should also look at the tenure of the fund manager to see if there is a match.

As I’ve shared before on Your Smart Money Moves, not opening your 401(k) statement is likely a poor way to plan for your financial future.  Since changes are happening more frequently with your 401(k) plans, you need to think like a CEO and analyze those changes so you can come up with the best outcomes for your money.

Contact Ted Jenkin at www.oxygenfinancial.net to request a free review of your 401(k) plan.

Written by:

Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®

Co-CEO and Founder of oXYGen Financial, Inc

Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice and Smart Money Moves to the X and Y Generation.

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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves


My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

Read More About Ted Here

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

Background and qualification information is available at FINRA's BrokerCheck website.

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