401k plans are becoming the primary source for retirement savings for many Americans. But still, many retirement savers are in the dark. When it comes to the Intel 401k plan, there are excellent resources available from human resources and the benefits team. But don’t stop there. Whether you are a current participant or a recently terminated employee, get an independent review. Make sure you’re not in the dark.
How does the Intel 401k plan rank?
According to Brightscope, the Intel 401k plan is above average compared to its peers. It receives a score of 82 which is 7 points less than the top rated plan of 89. Brightscope gives the plan kudos for low costs and an average rating for “company generosity.” The company generosity category is based on the “plan’s vesting schedule, eligibility periods, and all the contributions to the plan for the sole benefit of the participants.”
The Intel 401k has a broad list of investments to choose from. Due to the plan’s size it is able to utilize Collective Investment Trusts (CIT) in comparison to a mutual fund only lineup. Because these CITs are available only to institutions and not retail investors, they do not have the same regulatory requirements.This allows them to operate at a much lower cost. Think of it as a mutual fund for large institutional investors.
According to Brightscope, there are 25 investment options available and another source puts that number at approximately 15. In either case, that is a sufficient number of funds to prudently invest and allocate your portfolio.
What you don’t see everyday is the availability of a hedge fund within a 401k plan. Hedge funds are usually only available to qualified investors. These “qualified investors” meet income and net worth minimums. In addition, they must be willing to accept the additional risk associated with this type of investing. These options are only appropriate for high income and high net worth investors.
Hedge funds and private equity investments tend to be much higher cost than your typical mutual fund or CIT. There is much less transparency and disclosure with these types of investments. It is not common to see a typical 401k participant investing in them. According to a New York Times article on 11/20/2015, a lawsuit was filed against the company for its use of these investments within the 401k plan.
The Intel 401k plan also allows a brokerage window via Fidelity Investments. As the record keeper for the plan, Fidelity is who you would contact to make investment changes, update beneficiaries, and request distributions etc. By also allowing a brokerage window, participants gain access to a much wider range of investment choices. This can also be risky for some of the same reasons listed above. In fact, Intel has recently taken steps to restrict or prohibit access to certain investments within these windows.
Brokerage windows were developed as a way for 401k participants to invest “outside” of the plan. Let’s say your plan offered a choice of ten mutual funds. A brokerage window allows you to establish a separate account and gain access to individual stocks, exchange traded funds, and other alternative investments. Having more choice isn’t always a good thing. More choice can sometimes lead to more confusion. Worst case scenario is investing your funds in a high risk alternative that goes belly up. And poof. There goes your retirement account.
Do you have questions or need help?
If you have questions about your Intel 401k plan, be sure to contact HR and the benefits team at Intel. You can also contact Fidelity Investments directly via the link provided earlier in this post.
In addition, please feel free to contact me via this link. I offer prospective clients a free consultation. This is where we discuss your needs and identify the level of service that is right for you.
Have you recently terminated employment with Intel? If so, you have some important decisions to make with regard to your 401k. Contact me today to get started.
Information contained in the article regarding the Intel 401k plan, is based solely on publicly available information as reported on required tax and disclosure forms as of 2014. In addition, information was gathered from other media outlets. Do not base your investment or financial planning decisions on this article alone. Contact your benefits team, tax advisor, and financial professional to discuss your unique situation.