401(k) plans allow you to diversify money inside of a tax shelter for your retirement. The average plan gives you stock funds, bond funds and a money market account or two. If your stock or bond funds aren’t performing, or you expect the market to plummet, it may be time to move some cash to the money market account. Your 401(k) provider can easily meet this request and move your money to the money market once you know how the procedure works.
Find the phone number for your 401(k) plan representative or apply for online trading, if available. These options may both be found on your statement or the 401(k) provider’s website. If you choose to trade online, you’ll be asked to create an account password and may have to read through a few screens giving you permission to trade and to receive instant online quotes, so give yourself about half an hour or more to perform this task.
Ask about fees to move your money to the money market. Although large firms won’t often have fees to move money from fund-to-fund, some mutual funds have back-end sales charges to sell that you’ll need to navigate to move money to the money market. Asking about these fees before you make the transaction will allow you to decide whether the exchange is worth the expense it will cost.
Request a transfer of funds. Online, press the button to sell your current fund. When you’re asked what you want to do with the proceeds, choose to purchase the money market fund available in your 401(k) plan.
Wait for the confirmation message and write it down. You should keep the confirmation with you as proof that your fund was sold. Mutual funds are allowed to settle in three days, although the majority of the time they’ll trade at the close of business each day.
Check your statement to verify that your change took effect. When you receive your next physical statement, check the activity to make sure that your fund was switched when you requested the move. Remember that funds don’t move until the close of business each day, so if there was a large drop on the day you sold your fund, you still would have owned the position.
- Mutual Fund Liquidation Tips
- The Tax Implications of Selling Mutual Funds & Buying New Mutual Funds
- How Do I Trade Mutual Funds for Free?
- How do I Buy Closed-End Funds Without a Broker?
- Can a Stock Mutual Fund Be Rolled Over?
- How to Get Out of a Mutual Fund
- How do I Choose Mutual Funds?
- How to Calculate the Cost Basis of Stock Funds for Tax Purposes