My Employer’s 401(k) Move Cost Me $18K

Summary

Ramsey Everyday Millionaires

Episode: My Employer’s 401(k) Move Cost Me $18K
Release Date: June 23, 2025
Host/Author: Ramsey Network
Featuring: Dave Ramsey, Ken Coleman, Rachel Cruze, George Kamel, Jade Warshaw, and Dr. John Delony

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Introduction

In the episode titled "My Employer’s 401(k) Move Cost Me $18K," the Ramsey Network delves into the challenges that ordinary individuals face when managing their retirement investments, particularly during transitions between 401(k) providers. This episode underscores the importance of understanding the nuances of retirement accounts and the potential pitfalls that can arise, even for seasoned investors.

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Caller’s Dilemma: Aaron’s 401(k) Loss

Aaron’s Situation [00:15 - 04:57]:

Aaron, a long-time listener and advocate of the Baby Steps program, reaches out to the Ramsey Network seeking advice regarding a significant setback in his retirement savings. He and his wife successfully navigated Baby Step Seven five years prior, demonstrating their commitment to financial discipline and wealth-building strategies.

Key Points:

• Employment and Investment History: Aaron has been contributing to his company’s 401(k) plan for 14 years, amassing approximately $315,000 by March of the current year.
• Market Downturn Impact: In April, the market experienced a significant decline of about 25%, affecting Aaron’s 401(k) balance.
• Provider Transition Incident: Concurrently, his employer decided to switch 401(k) providers, resulting in a blackout period from May 7 to May 14. During this time, Aaron discovered that his investments were entirely divested from the market for seven days.
• Financial Loss: This blackout coincided with a market rally, leading to a missed growth opportunity. Aaron calculated a loss of approximately $18,000, equating to 237 shares.
• Long-Term Concern: With around 30 years until retirement, Aaron is deeply concerned about the impact of this loss on his financial future.

Notable Quote:

“I've lost about 237 shares valued at $18,000 out of that retirement account. And I've got about 30 more years projected to my retirement date.”
— Aaron [01:59]

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Hosts’ Analysis and Empathy

George Kamel’s Response [02:16 - 04:47]:

George expresses empathy for Aaron’s situation, acknowledging the frustration and financial impact of the blackout period during the 401(k) provider transition.

Key Points:

• Understanding the Impact: George explains that the missed opportunity was a result of bad timing and market fluctuations, emphasizing that such incidents are typically out of the employee’s control.
• Advice on Next Steps: He recommends that Aaron request a detailed transfer report from his HR department to understand the specifics of the transaction and ensure that his investments were handled correctly.
• Missed Gains vs. Traditional Loss: George clarifies that Aaron didn’t incur a traditional loss but rather missed out on potential gains due to the market’s rise during the blackout period.
• Market Risks During Transitions: He highlights that such risks are inherent when changing 401(k) providers, as the funds may be temporarily out of the market, potentially leading to missed investment opportunities.

Notable Quotes:

“That's not a loss in a traditional sense. It's more of a missed gain.”
— George [02:55]

“It's just part of the reality of an employer retirement plan. You don't have all the control.”
— George [04:43]

Ken Coleman’s Input [03:29 - 04:57]:

Ken echoes George’s sentiments, reinforcing the need for Aaron to move past the setback while acknowledging the sting of the financial loss.

Key Points:

• Reassurance: Ken assures Aaron that, despite the significant amount lost, this incident is not devastating in the grand scheme of his financial journey.
• Emotional Support: He empathizes with Aaron’s disappointment, recognizing the emotional impact of such a loss.

Notable Quotes:

“That's right. Yeah, it stinks. But you got to move on, so you know you're okay. This is not a devastating play for you.”
— Ken [03:29]

“Yeah, absolutely. That one stings.”
— Ken [04:55]

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Insights and Takeaways

Risk Management in Retirement Accounts:

• Provider Transitions: Changing 401(k) providers can introduce risks, including temporary divestment from the market, which may result in missed gains or potential losses depending on market movements during the transition period.

• Due Diligence: Employees should proactively engage with their HR departments and new plan administrators to understand the processes involved in provider transitions. Requesting detailed transfer reports can provide clarity and ensure that investments are managed appropriately.

• Long-Term Perspective: While an $18,000 loss is significant, especially for someone nearing retirement, maintaining a long-term investment perspective is crucial. The stock market tends to recover and grow over extended periods, and consistent contributions can mitigate short-term setbacks.

• Diversification and Stability: Diversifying investments and selecting stable, low-cost funds can help cushion against market volatility and reduce the impact of unforeseen events like provider transitions.

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Conclusion

Aaron’s experience serves as a cautionary tale about the vulnerabilities within employer-sponsored retirement plans, particularly during administrative changes. The Ramsey Network emphasizes the importance of staying informed, proactive, and resilient in managing retirement investments. While unexpected setbacks can occur, adherence to disciplined financial practices and a long-term investment strategy remain paramount for building and preserving wealth.

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Additional Resources

For listeners seeking personalized advice or facing similar challenges with their retirement accounts, the Ramsey Network recommends connecting with a financial advisor through platforms like SmartVestor at RamseySolutions.com.

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Transcript

[Aaron]

Foreign.

[George]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Aaron is up in Columbus, Ohio.

[Ken]

Aaron, how can we help?

[Aaron]

Hi Ken. Hi George. Thank you so much for taking my call.

[Ken]

You bet.

[Aaron]

Longtime listener and follower of baby steps.

[Ken]

Thank you.

[Aaron]

Wife and I made it baby step seven about five years ago.

[Ken]

Hey. Oh, that's no big, that's no small thing there. That's huge.

[Aaron]

Yeah, thank you. We've got a problem. I wanted to run something by you, get some advice and see what you think.

[Ken]

All right.

[Aaron]

So one of the things we're doing well that got us there is investing in our company 401k plans. And I work for a small business, very small family owned company at the LLC and have been in there 401k about 14 years. Have amassed about 315,000 at its height in March of this year. We know what happened in the market in April. So it went down about 250. And around that time the company wants to switch providers. So we get a blackout notice. Everything seems kosher. However, during that switch I found out that we were fully divested out of the market for seven days, May 7 to May 14. And if you've been watching the market, that was a rally period. So losses were realized. I lost about 237 shares valued at $18,000 out of that retirement account. And I've got about 30 more years projected to my retirement date. So the question I guess is have you ever heard of that? I guess it's standard, I'm told, for an old 401 provider to liquidate to cash and then spend some days to move out of the market and then rebuy with the new company.

[George]

Man, that really stinks. And you know, the changes like this happen all the time. But the crazy fluctuations in the market is just really bad timing to miss out as the market makes a comeback and you're sitting on the sidelines unable to do anything about it.

[Aaron]

Sure.

[George]

And so I don't know that there's anything you can do to get that money back. I mean, essentially it was out of your control and you're gonna just have to build that back up. But you can ask HR for a detailed transfer report, you know, and work with the record keeper to go, hey, what exactly happened? I wanna make sure that my investments are still invested where they were. It's in the same funds. I have the same amount of shares. But you're telling me that essentially they had to cash out this transfer temporarily for that week, and when they cashed it back in to buy the same amount of shares, you bought less shares because. Because of the price or what exactly?

[Aaron]

Price went up about 6%.

[George]

So it's not a loss in a traditional sense. It's more of a missed gain.

[Aaron]

Correct.

[George]

And that. That, unfortunately, is just part of the risk of any kind of 401k provider transition. And so you can talk to your employer. I doubt they're gonna do anything, especially as a mom and pop kind of small company. They're not a giant corporation where they're gonna go. We're gonna cover any misgains that happen because that's on us for changing providers. You guys had nothing to do with that decision. But I don't want you to spend too much time reeling over this because you guys are doing so well that it's such a small part of your world at this point.

[Aaron]

Sure, yeah, we had. I appreciate that. We did talk to the employer. In fact, it happened in 2017 as well, but it was only 15 shares and about $800.

[George]

Much smaller scale.

[Aaron]

Yeah. I warned the employer and asked the new advisor, hey, I've got scars from last time. And the stakes are, can this be avoided? And it wasn't avoided. And when I followed up, the response was, sorry, that can happen.

[George]

That's unfortunately what I thought the answer would be. I doubt you're like, well, let's just write you a check for $18,000, Aaron, for your missed gains. We're so sorry. I wish it worked like that, but it's just one of those snafus. And the timing could not have been worse. But it's a good reminder to not pull your money out of the market because the stats are pretty wild. Ken, if you missed, you know, the best 10 days of the market because you were sp, you thought, hey, this is. It's gonna go crashing. Well, you're gonna really miss out on gains on the other side when the comeback does inevitably happen. But, man, it's pretty rare that this kind of stuff happens. It's not every day that employers are just switching 401k providers, especially going a whole week with that money not sitting in any investment account. But it's just part of the reality of an employer retirement plan. You don't have all the control.

[Ken]

That's right. Yeah, it stinks. But you got to move on, so you know you're okay. This is not a devastating play for you. And it does stink, though. So sorry about that.

[George]

Yeah. I will grieve with you. On that one?

[Ken]

Yeah, absolutely. That one. That one stings.