It’s Time to Review Your 401k Investment Lineup
As a retirement plan sponsor, you have a fiduciary responsibility to your employees to act in their best interest, and a chief component of that responsibility includes carrying out investment decisions with skill and prudence.
In order to do so effectively, it’s important to regularly review your plan’s investment lineup. A qualified retirement plan advisor can assist in providing direction on investment diversification, guiding you through difficult markets and reducing unnecessary risk in order to best benefit plan participants.
During a plan investment review, your advisor may discuss the following:
- What asset classes are included within your plan investments?
- What criteria are you using to judge success?
- Are you monitoring funds that are underperforming?
- Are you benchmarking investments based on absolute or risk-adjusted returns?
- How are you preventing event risk?
- Are you providing appropriate target date funds based on your target demographic(s)?
Plans heavily exposed to company stock and underexposed to equities, for example, could indicate a lack of diversification and require a shift in focus.
Overall, your retirement plan’s investment portfolio should maintain emphasis on risk-adjusted returns with a long-term strategy to best gauge success. As a valuable recruiting and retention tool for employees, your plan requires thought and diligence to monitor and maintain, and a regular review alongside a qualified advisor can help you navigate the complexities and set appropriate goals for the future.
In addition to reviewing your plan’s investment lineup, you should also consider reviewing:
- Your investment policy statement;
- IRS operational compliance requirements; and
- Participant rates and overall plan health.
Many plan design changes require a brief notification period before a new plan year begins; thus, for plans with a December 31st year-end, now is the time to schedule a review. How long since your plan’s last review?
Our Retirement Plan Advisory Team offers complimentary investment reviews for 401k and 403b plan sponsors and administrators. To schedule your investment review, please reach out to us.
Material discussed in this communication is meant to provide general information and should not be acted on without obtaining professional advice tailored to you or your company’s individual and specific needs. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used by any person or entity, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This information is for general guidance only and is not a substitute for professional advice.
The information contained herein should not be construed as personalized investment advice. Investment in securities involves the risk of loss, and past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this document will come to pass. Historical performance results for investment indexes and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. There can be no assurances that your portfolio will match or outperform any particular benchmark.
Information presented was obtained from sources deemed qualified and reliable; however, MFA makes no representations as to accuracy, completeness, suitability, or validity of any information within this communication and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any forward-looking statements are believed to be reasonable; however, MFA gives no assurance that such expectations will prove to be correct.