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Pay Attention to Automated Retirement Savings Plans

Road Sign Saying To Retirement 401k Invest Wisely --- Image by © Royalty-Free/CorbisHow much attention do you pay to your automated retirement savings? Once we have decided what to contribute to a 401(k) or other automated savings plan, we just assume that money is being set aside and perhaps only check its growth once a year or so.

A Washington Post “@Work Advice” column outlines scenarios that demonstrate why our retirement accounts and investments merit more vigilance. As the title “When your company plays fast and loose with your retirement savings” indicates, your employer may not play fair with your retirement funds.

One reader wrote in to say that while it seemed that her company had set up her IRA on December 2012, the account wasn’t actually set up until April 2013 and not funded until June 2013. The reader imagines that the company “floated” the money either because of negligence or because they purposefully used her money elsewhere with the intention of replacing it later.

Another reader wrote about working for a company that said it was changing “in what sounded like a common merger/buyout.” This change happened just as many employees were close to being 100 percent vested and employees were told that they’d lose the money they had and would start over with a new 401(k) with the new company. As it turned out, the company seemed to only change names without really becoming a new entity or joining with another enterprise. The reader suspects this was just a ruse to hold onto the retiree funds many employees had accumulated.

The columnist responded that if these scenarios happened as written, both employers are in the wrong and suggested that the readers contact the Labor Department’s Employee Benefits Security Administration.

Situations like these illustrate why it is beneficial to work with a Fee-Only financial planner. While these astute readers noticed these discrepancies, it is possible for you to miss something that will cost you money in the future. You might also consider that a financial planner can help you with a retirement planning strategy that goes beyond an employer-sponsored plan, so you have plenty of resources and do not have to rely solely on your employer.