Q:

Is it important to check your 401(k) balance?

A:

Quick Answer

Account holders should regularly check their 401(k) balances to ensure that investments are performing as expected, advises the Financial Industry Regulatory Authority. When necessary, investments in an account should be reallocated or rebalanced to assure optimum returns, explains Financial Samurai.

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Full Answer

Regularly checking the performance of a 401(k) and adjusting assets to ensure optimal growth are essential, as the instrument plays a critical role in assuring financial security after retirement, notes FIRA. The performance of a 401(k) solely depends on the choices of individual account holders. Account administrators cannot determine the outcome of a 401(k) account; their roles are limited to keeping records, generating reports and executing transaction requests from account holders, explains FIRA.

Account holders should check their 401(k) balance at least twice every year, advises the Financial Samurai. These checks should not be limited to ensuring that assets are performing optimally; they should also be used to assure that asset allocations are in line with the account holder's risk tolerance.

The performance of a 401(k) is also affected by the type and level of fees charged, warns FIRA. These include administrative fees, loan fees and investment management fees. At 0.02 percent to 2.5 percent, investment management fees typically make up the largest proportion of all fees charged to a 401(k) account. Account holders should carefully consider the impact of such fees when adjusting assets. Unnecessary asset adjustments should be avoided, warns FIRA.

401(k) balances can be checked online or by calling or faxing an account administrator, explains The Nest.

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