Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

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tkiyak
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Joined: Sun Apr 14, 2019 2:34 pm

Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by tkiyak » Sun Apr 14, 2019 2:45 pm

I've been a lurker for some time, but have never really participated in the forum until today.

My wife and I both have a 457B retirement account with Fidelity through the university we work for. This Friday, we noticed that our holdings in Cohen & Steers Institutional Realty Shares (CSRIX) were sold off and instead shares in Principal Real Estate Securities R-6 Fund (PFRSX) were bought for the same amount.

We have received absolutely no notification (advanced or after-the-fact) that such an exchange would be taking place, nor were we ever asked whether or not I am fine with the exchange or whether we would like to invest in a different fund instead. All notification come into an email account, and I never delete them. I searched through last several months of emails and there was absolutely no notice.

CSRIX used to be one of the 22 funds available to our plan, and it looks like it is no longer available. It seems to have been switched with PFRSX. I understand that fund choices may change from time to time, based on a variety of considerations. As far as I could research, no merger has taken places between these funds.

So, my question is the following: Can a vendor do that without any notification or approval? After all, aren't these my holdings? Can they just decide to sell and buy as they wish? Even though they are comparable funds (they are both real estate funds, about same risk profile, bot of course slightly different expense ratios and slightly different returns), it seems strange to me that this was done without my knowledge so I'm curious more than anything whether or not this is within their rights.

Thanks!

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Stinky
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Re: Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by Stinky » Sun Apr 14, 2019 4:31 pm

You should check the 457 plan document to see what rights there are. You might have the document; it might be on your login website; or you could get it from your benefits people.

I expect that the plan sponsor has the right to add new investment options, to discontinue existing ones, and to move balances of discontinued options into corresponding options that are currently available. It would seem best practice to give participants notice; I don’t know if that would be required under the law or under your plan.

You might also carefully check the plan website. Even if they didn’t send you an email, they may have posted the change in fund lineup there.

At the worst, if you don’t like the fund that your money got moved to, you can move it somewhere else within the plan. But, of course, you’re limited by fund choices within the plan.

Best of luck to you.
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adamthesmythe
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Re: Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by adamthesmythe » Sun Apr 14, 2019 8:05 pm

I've had funds exchanged WITH notice. I seem to remember it coming by snail mail not email.

Usually this happens because administrators have decided that having too many choices made them vulnerable to lawsuits. Sometimes you have the option to open a brokerage account that has more choices. If this is possible it will be a pain.

Dottie57
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Re: Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by Dottie57 » Sun Apr 14, 2019 8:24 pm

I just received email notification of a change in plan. Aberdeen emerging markets is gone and Wellington emerging markets is taking its place. Money in Aberdeen is being Moved to Wellington in May.

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Nate79
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Re: Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by Nate79 » Sun Apr 14, 2019 9:36 pm

I always understood that they need to give you notice but they absolutely do not need to ask your permission to change from one fund to another. I find it highly unlikely that some form of notice was not given such as physical mailer (most likely) or message within the system.

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tkiyak
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Re: Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by tkiyak » Mon Apr 15, 2019 9:30 am

Thank you all for your responses. I'm going to reach out to Fidelity and see why I didn't receive a notification. As far as I can see, I have no emails and no physical mails notifying me of the situation. Of course, it could have gotten lost or spam-filtered, but I'll check with them.

retire2022
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Re: Retirement Plan - Can Vendor Exchange Funds without Notice or Approval?

Post by retire2022 » Mon Apr 15, 2019 11:09 am

tkiyak wrote:
Mon Apr 15, 2019 9:30 am
Thank you all for your responses. I'm going to reach out to Fidelity and see why I didn't receive a notification. As far as I can see, I have no emails and no physical mails notifying me of the situation. Of course, it could have gotten lost or spam-filtered, but I'll check with them.
Op I’ve been in NYSDCP for 29 years, fund changes have been done in the past with permission from the NYSDCP board.

The plan custodian Nationwide executes the decisions of the board. This is typical in our plan, I suggest you look over their website with a fine tooth comb.

Last change was Collective Investment Trust which is harder to track and not monitored by SEC.

Good luck

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