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401K question

edited November 2013 in Fund Discussions
My company is changing 401K companies in December and there is a blackout period for the plan of almost 4 weeks. During the blackout period, I will not be able to direct or diversity the assets held in my account. Looking for input, should I go to cash for this window?


  • My quick response is that you should not do anything. On the other hand, the 4-week blackout period is the longest I have ever seen. Usually it is 1-2 weeks tops. If your existing holdings are good quality and your history is not one of moving in and out of the markets, why change that now? Unless you have a very strong conviction that there is about to be some kind of black swan event, I would hold on and try to avoid watching the financial news.
  • Dear Carefree: I agree with BobC, the best course of action is to do nothing.
  • Are the funds changing as well or just the 401k company?

    If the funds are changing, then you need to see how the old funds are being mapped to the new funds. If you have new funds, and the old ones are not being mapped to "how" you like it, then it may be best to go "cash" (cash here is the money market fund within the 401k). And over time, you can easily average into the new funds.

    Two personal experiences: when my old employer changed 401k providers, they did away with all actively managed funds, and provided only target date funds as well as self-directed brokerage. They mapped all old funds to new target-date funds based on employee age. I moved into "cash", and then use the self-directed brokerage (TR Price).

    And in my wife's case, she got better (and cheaper) funds and old-to-new funds were mapped correctly to how we would want it, so we didn't do anything; we allowed the conversion to be processed as mapped out (unfortunately, the conversion was done on one of those days when the market closed very high). In hindsight, we could have gone into cash, and dollar-cost-average into the new funds.

    I guess it all depends on the quality of funds, size of portfolio, and time horizon. If you are sitting on high gains, I will move to cash now, and then average into new funds (especially if you have new funds that "may" change your asset allocation). And if portfolio size is not too big, and you like old-to-new mapping of funds then sit tight.
  • Thanks for everyone comments! Yes, the funds are changing and very little crossover of the same funds.
  • It is not an all or nothing decision. You could go 50% each way and you would be assured of being half right.
  • I would move a small portion to cash and let the rest ride
  • What is the harm in sitting tight? Something I am not getting here. What does it matter?
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