The market downturn left many investors wary of putting money into 401(k) investments. Such investments fell to $50.5 million in 2010, compared to $60.6 million in 2007.
Following are some things to consider when putting money back into a 401(k) plan:
• Most 401(k) providers get a cut of the expense ratio on the funds in which you invest, and it is often difficult for you to know exactly what fees the 401(k) plan is charging.
• When you leave your job, you may have to pay to keep your 401(k) plan at your old company. Some employers pay the fee to administer your plan while you work for them, but they pull the plug once you are off the payroll.
• Your fund choices may be poorer than you think. Average 401(k) investors have 18 fund options, according to the Profit Sharing/401(k) Council of America, but they may not be the optimal fund options. Ideally, a 401(k) plan should offer a handful of “core” funds, like a money market fund as well as bond index, domestic equity index and international equity index funds.
If you aren’t happy with your plan, you may be able to transfer your 401(k) assets to an individual retirement account (IRA). Your financial advisor can help you determine if you are eligible for such a transfer.