401K question

[ksu_aviator]

Is there a rule that addresses nepotism and 401Ks? My current employer uses his son to mismanage our 401K and I was wondering if that was against any rules. I doubt it is, but I really want my 401K to do better than -0.9% earnings when the S&P is up 7%.

 

[Lutherf]

You should be offered several choices for what the funds can be invested in. If it's really performing that poorly and you don't have any other options then take a loan against it and invest yourself.

 

[Lord of Planar]

Must be a pretty bad company not to have standard mutual fund options.

 

[greyhat]

Is there a rule that addresses nepotism and 401Ks? My current employer uses his son to mismanage our 401K and I was wondering if that was against any rules. I doubt it is, but I really want my 401K to do better than -0.9% earnings when the S&P is up 7%.

It doesn't sound like its a true "401k" per se; these are administered by a third party administrator, and the investment choices dictate return & risk. Usually there is a menu of mutual funds to chose from.

It sounds like you guys have a non-prototype plan or perhaps a profit sharing plan.

 

[ksu_aviator]

Actually, they set up all ETFs in a 401K. If you go it yourself, there are 3 that are getting a positive return. The other 7 are losing money. The administrator plans (which bundle several together based on their assessment of the risk) are all losing money. Any where from 2.5% to 0.9% down. Oddly enough, it is the "aggressive" plan that is not as far down.

 

[greyhat]

Actually, they set up all ETFs in a 401K. If you go it yourself, there are 3 that are getting a positive return. The other 7 are losing money. The administrator plans (which bundle several together based on their assessment of the risk) are all losing money. Any where from 2.5% to 0.9% down. Oddly enough, it is the "aggressive" plan that is not as far down.

It sounds like its not the son's fault then, but rather the asset allocation you hold. I would guess that most of the funds that are down are bond funds which depending on their duration would have experienced declines in May/June. If they're ETFs then that amplifies the issue as there is no manager choosing to lower duration or change credit quality therefore the funds would just stick to the benchmark.