Evaluating new fund options in a 401(k) plan

Retirement » Evaluating New Fund Options In A 401(k) Plan

Don't dismiss new fund options
Don't dismiss new fund options © dotshock/

If your employer has recently added new fund options to your 401(k) plan, you may be unsure about how to evaluate those offerings in the context of the funds you already own. While it may be tempting to play it safe and stick with what you already have, that could be a mistake, as new investment options may help you diversify your portfolio, lower your expenses and upgrade the quality of your retirement savings plan.

More plan sponsors are either adding new funds to their existing 401(k) plans or considering changing 401(k) providers, due to recent Department of Labor rules that have increased transparency around 401(k) fees, says Jeff Nauta, a financial adviser with Henrickson Nauta Wealth Advisors in Belmont, Mich.

"These new rules have forced plan sponsors to be more cognizant of the fees they are charging, so more lower-cost options are being added to plans, including index funds," he says.

When analyzing any new fund options that have been added to your 401(k) plan mix, consider them in relation to your overall investment objectives and your asset allocation strategy. Since it's your retirement on the line, it's important to take an active role in managing your investments within the 401(k) plan, says Richard E. Reyes, a CFP professional with The Financial Quarterback in Maitland, Fla.

Maximize your 401(k), and retire in style No matter where you are in your career, be sure to make the most of your workplace retirement plan.


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