Rebalance accounts regularly
Let's assume you have a 50-50 mix of stock and bond investments. Within the stock portion, one-third is in small companies, one-third is in midsize firms and the rest is in large caps. Stocks are cyclical, and they generally don't move in unison. For instance, small- and midcap stocks may experience a big runup in a particular year, so you may discover that your stock holdings have mushroomed to 65 percent of the portfolio. In that case, it's time to rebalance to your original asset allocation, assuming your goals, risk tolerance and time horizon haven't changed.
Many 401(k) plans offer automatic rebalancing, which can help keep each retirement plan allocated proportionally among funds and balanced within original objectives. If that option is available and you haven't signed up for it, it's worth considering, Armstrong says.
If automatic rebalancing isn't available, you'll need to monitor and rebalance all your accounts regularly to ensure your original asset allocation remains in place. This might require summoning help from an accountant or financial adviser, particularly if taxable accounts are involved.
Even if the 401(k) plans are automatically rebalanced, you still need to monitor each account to ensure that any changes to your overall asset allocation strategy are reflected in your retirement plans.