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RandySF

(57,604 posts)
Sat Mar 21, 2015, 10:45 PM Mar 2015

401k trickery: Is this legal?

My employer very quietly announced that not only are they dropping a number of fund options for the 401k plan, they are going to liquidate any investments in the discontinued funds and put them into funds of their choosing. BTW they don't match any contributions. Is this legal?

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401k trickery: Is this legal? (Original Post) RandySF Mar 2015 OP
I don't think they can do that if your name is on the 401K, but I may be wrong. Just before I Nay Mar 2015 #1
Yes. What they usually do in those cases is move the money from the funds they are in, to still_one Mar 2015 #2
Is your employer managing the accounts or a third party? LiberalFighter Mar 2015 #3
completely normal taught_me_patience Mar 2015 #4
I was happy with the one I had. RandySF Mar 2015 #5
It's normal Algernon Moncrieff Mar 2015 #6

Nay

(12,051 posts)
1. I don't think they can do that if your name is on the 401K, but I may be wrong. Just before I
Sat Mar 21, 2015, 10:51 PM
Mar 2015

retired, my workplace dropped some options and added others to the 401K plans, but we decided which funds our discontinued fund money went to.

still_one

(91,937 posts)
2. Yes. What they usually do in those cases is move the money from the funds they are in, to
Sat Mar 21, 2015, 11:13 PM
Mar 2015

comparable like funds. However, if you do NOT like where the funds are being moved to, then you can move out now before the transfer occurs, and move them to funds you do prefer that are NOT being dropped. At least that is what I would do


LiberalFighter

(50,480 posts)
3. Is your employer managing the accounts or a third party?
Sat Mar 21, 2015, 11:18 PM
Mar 2015

I would think it would be the third party and they would be responsible for notifying you of any changes.

Algernon Moncrieff

(5,780 posts)
6. It's normal
Sun Mar 22, 2015, 01:35 AM
Mar 2015

Although your employer announced the change, generally 401Ks are managed by brokerage houses (e.g. Schwab, Fidelity, etc.). If you don't like where they've reallocated the funds, reallocate yourself, or see if there is a self management option.

Alternatively (TALK TO A TAX PROFESSIONAL FIRST!!!), see about liquidating the 401K; paying the tax; and putting the taxed proceeds into a Roth IRA at the brokerage of your choosing. You get tax free withdrawals at retirement.

Alternatively (TALK TO A TAX PROFESSIONAL FIRST!!!), several organizations such as Caesar's Palace and Harrah's have a high risk/high reward investment plan called "Roulette." I've heard good and bad things about it.

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