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Experts Say 401K Accounts Still Hold Up

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Sep 16, 2008 9:33 pm US/Mountain

Experts Say 401K Accounts Still Hold Up

Good Question: Is My 401K Safe?

Written By Alan Gionet
Reporting
Alan Gionet
DENVER (CBS4) ― "The stuff that I have, mine needs to be changed, but I don't know enough about it to change it," a woman said.

We all feel a little bit behind the curve when the financial markets move down faster than we can react. But many experts are saying don't worry about reacting with lightning speed to sell, sell, sell.

First of all, the question about what's safe.

"The structure of the U.S. retirement plan system, and I'm speaking of 401k's in particular, is set up in such a way that it makes it very, very difficult for a bankrupt company to also drag down the 401k plans," said Andy Ratkai, Praxis Advisory Group President and Adjunct Finance Professor.

That means if a person has an account with Merrill Lynch, and it's sold to Bank of America, their account cannot be grabbed by anyone along the way. It's still there's, so is the money in it. There are incidents in which money has been taken from people's accounts in the past, but that's outright fraud or stealing.

"I will never say never, however the likelihood is incredibly small," Ratkai said.

He suggests just keeping tabs on the money, which is the best thing to do in a troubled market, or at any time for that matter. Make sure that automatic paycheck deductions are showing up in the 401K account.

What about the down market?

University of Denver Daniels College of Business Ph.D Ron Rizzuto says he has not panicked.

"I don't intend to sell because you'll just lock in your loss," he said.

Ratkai says we're closer to the bottom than the top.

"This is the point of the most dramatic news and say the most emotional point in the decline."

Ratkai says to keep track and think about bargains and follow the market.

There's more information in the video on the right.

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