Poor 401(k) management
I really trust Fidelity, and my IRA administrators (ING Retirement), too much. I assume that they are handling my investments according to my directions. However, in recent months I am not so sure.
Check out this item from last Friday's Wall Street Journal, by Arden Dale, which describes an incident involving a Delphi 401(k) plan managed by Fidelity:
Delphi discovered during a recent audit that the 401(k) plan had continued reinvesting dividends in a fund holding General Motors Corp. stock for four years after it was supposed to have begun redirecting those dividends to an income-oriented fund. Over that period, GM shares performed far worse than the intended destination, the Promark Income Fund.
The article notes that the mistake was costly for some Delphi participants:
David Kudla, a financial adviser in the Detroit area, says the affected Delphi employees among his clients were all hurt, not benefited, by the 401(k) error. One individual is due a credit exceeding $3,600 and another more than $4,800, he said.
I recently was rehired by the company I worked for in the early part of this decade, and found that ING Retirement had not properly sent the first three months of my 401(k) contributions this year to the new designations I made upon being rehired -- instead they stuck it in the old funds that I used to own in the 401(k) prior to 2002. When I discovered this, I calculated how much I should have made in the three month period, and compared it to what actually accrued under the misplaced allocations. It was almost the same, so I let it go. But if it was a loss of more than $100, I would have fought them on it, using a copy of my contribution allocation sheet from the beginning of this year. Additionally, I went online and made the changes on my own right away.
The moral of the story: Pay attention to your 401k allocations, what funds you are supposed to be invested in, and what investments those funds make. And keep your records of transactions, sign-up sheets, and other documents. It could save you money and headaches later on.
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