Three things to know about your 401(k) statement
There are two types of 401(k) savers in this world: those who quickly glance at their 401(k) statement (or don't even look at it at all) before filing it away or throwing it in the trash, and those who immediately start analyzing the returns on their investments as soon as the statement arrives in their mailbox.
If you align more closely with the first category, you may be missing out on valuable information about the performance of your retirement account and the health of your financial future. When was the last time you took more than a few seconds to glance over your statement? Can you confidently say how far along the path to retirement readiness you are based on what you know from your 401(k)?
If you're having a tough time answering any of the above questions, it's time to start taking your quarterly and annual 401(k) account statements a little more seriously. Here are three of the most important things you need to know:
1. Where to find your 401(k) statement (h2)
The Department of Labor (DOL) requires that 401(k) plan providers send quarterly statements to employees no later than 45 days after the end of the quarter, so keep an eye out for your statement in your mailbox shortly after each quarter ends.
Your plan provider may also offer paperless statements or online access to 401(k) statements. You may be unknowingly enrolled in paperless statements, so check your account settings to know where and how you’ll be receiving your statements.
If you're unsure of how to find 401(k) statements from your specific retirement plan provider, contact your provider or HR representative for additional help.
2. How to read an investment statement (h2)
Your 401(k) statement may look overwhelming at first glance, filled with all kinds of numbers and charts, but there are a few sections you'll want to look for to help you truly understand your statement.
First, the Account Summary section will include information like your beginning balance (the amount of money you had invested at the start of the period), your contribution amount and any employer contributions, gains and losses, and total account value. This information will give you a snapshot of how your investments performed over the quarter or year—but remember that retirement planning is a long-term game and the stock market can be quite volatile in the short-term. While seeing a significant drop in the Account Summary section could cause some anxiety, remember to stay calm and stay the course. Focus on the future—and remember that the stock market has seen significant losses in the past and has, historically, always successfully rebounded over time.
Some providers, in an effort to offer transparent and upfront pricing, will also include any fees associated with the account in the Account Summary section. If the fees aren't listed here, make sure you locate them elsewhere on your statement so you know what you’re being charged.
Next, you'll want to look at the Investments section of your statement, which will have a detailed list of where your money is currently invested. You'll see a breakdown of the different asset categories you’re currently invested in, as well as the percentage of your assets being invested in each. Keep a close eye on these to ensure that your portfolio aligns with your risk tolerance level and retirement goals. If not, consider reviewing or potentially updating the investment allocations to keep your portfolio aligned.
Finally, look for an Account Balance History section on your statement to get a more holistic view of the health of your retirement account. As we mentioned, planning for a successful retirement takes many years and some strategic long-term decisions. The Account Balance History section should allow you to easily see the gains and losses throughout the lifetime of your account instead of over just the statement period.
- What to look for in your 401(k) statement (h3)
We know that retirement planning can be complicated and is extremely unique to every saver, but not every employee has the background to understand all of the financial information included in their statement. That's why some of the best 401(k) statements are easy to understand and include data like:
- Individual fund performances linked to fund information
- Side-by-side historical balance and contribution information
- Customized insights and helpful hints
- Retirement savings translated in a way that makes sense to the saver
If you have any other questions about your 401(k) statement, please don't hesitate to contact our customer care team at 888-652-8086.