5 Ways Participants Can Make Their Lousy 401(k) Plan Better

5 Ways Participants Can Make Their Lousy 401(k) Plan Better

A recent article titled “5 ways to make your lousy 401(k) plan stellar” suggests actions that a 401(k) plan participant might take to improve if they are in a less-than-desirable 401(k) plan.  In summary, the five options are:

1. Self-directed accounts. While not offered by all plans, some of them do, and it lets you range outside the fixed menu of investment options.  Tread carefully here though. As the Dalbar studies show, most “go-it-alone” investors tend not to do so well, so be be sure you have a solid investment plan the investment discipline to follow your plan. However, self-directed accounts let you invest in ETFs or a better array of investments.

2. In-service transfer.  Some plans let you roll over some of your 401(k) balance while you are still working.  There are pitfalls here, so don’t do this without fully knowing the consequences of a misstep that could be expensive.

3. Persuasion.  Consider approaching the Plan trustees to offer more (or better) options in your plan.  Plan sponsors are usually the owners or executives of your company. Or, there may be a Plan committee. Either way, 401(k) Plans are set up to be a benefit for employees and if you have an idea to improve it, both you, the Plan sponsor, and your colleagues can benefit.

4.  Invest less.  If your plan is very limited in its investment options, invest only the amount which allows you the employer match, and then put other money into IRAs or other accounts that provide you with better investment options.

5.  Rollover IRA.  If you change employers or retire and your plan has substandard investment options, move the money to a Rollover IRA, which offers more investment choices.

The full article can be read at MarketWatch.com.