New Era of 401k Transparency

This past week marked the official beginning of a new era of transparency for 401(k) plans – mandated by new U.S. Labor Department requirements. Thursday (August 30) was the deadline for plan sponsors to get a notice to every plan participant regarding all costs of the plan, performance data on each investment option available through the plan, and the performance data of investment “benchmarks” (eg. the quarterly and annual returns of the S&P 500 Index, with which one can compare the performance of a large cap fund). To the average person, these disclosures should be obvious common sense; but one of the financial world’s “dirty little secrets” has been how extremely profitable 401(k) plans have been for companies providing such plans to employers – packed with countless undisclosed fees and expenses. Investment companies and employers have both been scurrying for many months making huge adjustments to existing plans in order to comply with the new regulation!

Now that you’ve been provided this helpful information, this is a great opportunity for you to review your plan in detail. Use the data in this required notice to do the following:







The U.S. Labor Dept. has created new regulations that took full effect at the end of August.

Photo credit: trenttsd, licensed through Creative Commons (on

1. Calculate the asset allocation within your own plan – what percentage of your total plan value is invested in stocks (domestic and international), fixed income (short-term, long-term, high-yield, etc.), annuities (fixed or variable), or money-market funds.

2. Review your financial goals and consider if your current allocation “fits” your goals and your time horizon (ie. how old you are relative to retirement, etc.).

3. Experts long ago concluded that one’s asset allocation determines at least 90% of the return of an investment portfolio, so reviewing your allocation at least annually is crucial.

4. Make absolutely certain that you are contributing at least the maximum amount that your employer will “match” each year. Contributing less than that amount is literally “turning down free money” – never a good idea.

5. Beyond the “employer match” amount, consider contributing even more each year, up to the amount allowed by law. For example, an employee of any age can contribute up to $17,000. If you are at least 50 years old, you can add an extra $5,500! You will save money on taxes and help fund a better retirement.

6. The amount you “defer” each year (ie. your 401(k) contribution) has been found to be the single most powerful factor in determining the success of your 401(k) – even more important than asset allocation!

This review process is so very important to your financial success that you really must make time (an hour or two should be more than enough) to look at your current plan investments and the choices your plan offers to update and improve the future return on your assets.

In just three months, you should be getting documents from your plan provider (employer) disclosing all fees related to the plan – from each fund’s “load” and annual expense ratio, to charges for managing the 401(k), joining the plan, leaving the plan, or securing a loan on plan assets. We’ll update you on that in November!


Submitted by Tom Petty of Examiner

Be Sociable, Share!

Related Posts


MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.

This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.

The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The educational training program and software services are provided to improve financial understanding.

The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.