Got a late Christmas present yesterday from an unlikely source: my employer’s 401(k) provider. Well, it actually came in early October, but I didn’t notice it until the other day when I checked my quarterly statement. Now, the plan has always had a decent selection of investment choices, but there have always been a bunch of things that bother me about it…

1. The plan has a board of trustees that determine the investment choices, and the board has a habit of eliminating various mutual funds (replacing them with others) after relatively short periods of underperforming.
2. The investment options are mainly regular, non-proprietary mutual funds with ticker symbols, etc. However, the provider, being an insurance company, feels the need to treat the funds as annuity investments, and tracks them using its own ‘unit’ system rather than using the funds’ actual NAVs.
3. The fees are higher than they should be (although the provider passes on some mutual fund management fee reductions it negotiates, and these offset the provider’s fees somewhat, though not nearly enough).
4. The quarterly statements have never made sense. The number of ‘units’ owned never adds up to the sum of ‘units’ purchased with each deferral to the plan. This, to me, has always been the biggest problem with the plan. It makes it impossible for me to (properly) track my account with my financial software, and leaves me wondering what’s actually going on behind the scenes.

Anyhow, in early October the provider quietly took a huge step in the right direction by abandoning its unit scheme and switching to a share-based valuation system using the funds’ actual NAVs. All of a sudden, the statements make complete sense, and I can track my account day-to-day because the fund NAVs are available online.

I still think the fees are too high, but I have to say I’m much happier with the plan now.