What does this mean?

[dirtbiker]

My company was just bought out, and the 401K was moved from Principal to Paychex. I was automatically enrolled in a year 2045 retirement plan. I want to rebalance to 100% S&P 500 ETF, and when I went to make the change, this notice popped up:

"100% Schwab S&P 500 Index
A purchase block will be placed on an American Fund if your redemption for that fund exceeds $5,000.00. The block will be in effect for 30 days unless another time period is specified in the fund's prospectus."

What does this mean? And my 401K balance that I will be rebalancing is greater than $5000.

 

[PaunchyPirate]

My company was just bought out, and the 401K was moved from Principal to Paychex. I was automatically enrolled in a year 2045 retirement plan. I want to rebalance to 100% S&P 500 ETF, and when I went to make the change, this notice popped up:

"100% Schwab S&P 500 Index
A purchase block will be placed on an American Fund if your redemption for that fund exceeds $5,000.00. The block will be in effect for 30 days unless another time period is specified in the fund's prospectus."

What does this mean? And my 401K balance that I will be rebalancing is greater than $5000.

What is the name of the 2045 Fund you are leaving? Is it named "American Funds 2045 or similar?

I would suspect this message is saying that you will be blocked from re-purchasing the 2045 fund again for 30 days since you are effectively selling it now (to buy into the S&P 500 Fund).

Sometimes mutual fund companies restrict selling and re-buying within a short time period to minimize chasing the market.

 

[MRG]

What is the name of the 2045 Fund you are leaving? Is it named "American Funds 2045 or similar?

I would suspect this message is saying that you will be blocked from re-purchasing the 2045 fund again for 30 days since you are effectively selling it now (to buy into the S&P 500 Fund).

Sometimes mutual fund companies restrict selling and re-buying within a short time period to minimize chasing the market.

+1

 

[braumeister]

Yes, that's called a round-trip restriction. Very common with mutual funds.

Nothing for you to worry about, I think.

 

[Jerry1]

Assuming that’s settled, it might be a good idea for the OP to start a thread discussing why they’re going from a balanced fund to 100% stocks. That’s a bit beyond “rebalancing”.

 

[PaunchyPirate]

Assuming that’s settled, it might be a good idea for the OP to start a thread discussing why they’re going from a balanced fund to 100% stocks. That’s a bit beyond “rebalancing”.

It sounds like his money was automatically placed in the 2045 fund when his employer switched to the new 401k administrator. They probably put everyone's money in a fund based on their age by default and then left it up to the employee to move it into desired funds if they want.

 

[dirtbiker]

Thank you everyone! That makes sense. Gotta love the quick replies I always get here in this forum.

Assuming that’s settled, it might be a good idea for the OP to start a thread discussing why they’re going from a balanced fund to 100% stocks. That’s a bit beyond “rebalancing”.

I'm getting back to 100% stocks. In the principal fund, I was 100% in an S&P 500 ETF. When they changed companies, I was automatically put into this one.

 

[Big_Hitter]

My company was just bought out, and the 401K was moved from Principal to Paychex. I was automatically enrolled in a year 2045 retirement plan. I want to rebalance to 100% S&P 500 ETF, and when I went to make the change, this notice popped up:

"100% Schwab S&P 500 Index
A purchase block will be placed on an American Fund if your redemption for that fund exceeds $5,000.00. The block will be in effect for 30 days unless another time period is specified in the fund's prospectus."

What does this mean? And my 401K balance that I will be rebalancing is greater than $5000.

looks like it's a cooling-off period? I'd read your SPD or plan document

 

[Jerry1]

Thank you everyone! That makes sense. Gotta love the quick replies I always get here in this forum.



I'm getting back to 100% stocks. In the principal fund, I was 100% in an S&P 500 ETF. When they changed companies, I was automatically put into this one.

That makes a lot more sense. Best to you.

 

[HI Bill]

If the OP has a 24-year horizon until retirement, I see nothing wrong with being in the S&P 500, 100%. Still, some diversification might be warranted.