Happy New Year, especially for your 401(k)! Year-end 401(k) and other retirement plan statements are now coming out and there’s reason for excitement: the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all posted excellent returns in 2017. Even the international markets, which have lagged the last few years, participated in the rally.

So while it may seem like a good year to just check the bottom line balance and file your statement away, now is the time to add your 401(k) to your New Year’s Resolution list.  According to Wikipedia, a New Year’s resolution is “a tradition in which a person resolves to change an undesired trait or behavior, to accomplish a personal goal or otherwise improve their life”. Resolve to improve your financial life in 2018 starting with the following three tips.

#1) Diversify your tax savings

If you’re like most investors, the majority of your workplace retirement account savings are invested using pre-tax dollars. While this strategy in not inherently wrong, it leaves little to no flexibility when the funds are needed at retirement. Use the New Year to revisit not only your overall savings rate but where your current savings are being directed.

Most retirement plans now offer a Roth savings option or even allow savings to be done on an after-tax basis. If you’re not sure what option is best for your situation, see Resolution #3. Adding different “buckets” to your retirement savings not only helps with tax diversification but allows for additional planning opportunities in the future. With the recently passed Tax Cut and Jobs Act (TCJA), that lowered the marginal tax brackets for most investors, now is a great time to revisit your overall savings strategy.

#2) Review your plan options

When was the last time you reviewed your 401(k) fund holdings or even compared their performance against various benchmarks? If your current funds were chosen using the Morningstar star rating system or even based on previous three or five-year performance numbers, it’s time to revisit your strategy. There’s also different investing styles to choose from and performance can vary greatly. In 2017 for example, the average Large Cap Growth fund outperformed that average Large Cap Value fund by over 11%! International funds outperformed the S&P 500 for the first time in five years. Take the time to review your current fund lineup, including performance and fees, to see if better options should be utilized going into the New Year.

#3) Get Advice

Studies have shown that participants often find their company heath care benefits easier to understand than their 401(k) plan investments. Understanding the maze of investment options in your plan is just the beginning. Is your current asset allocation picture appropriate in today’s market cycle? Are there other features available such as a brokerage window that allows access to additional investment options? Is an in-service withdrawal or even a Roth savings option available? These are the features that are often overlooked but can provide tremendous value to your overall financial picture.

At Vintage, one of the services we offer is the management of 401(k) accounts or other employer-sponsored plans. Vintage can not only help analyze and screen the available features and options, but proactively manage the account within your overall investment strategy. Taking this big-picture view helps prevent unnecessary exposure within various asset classes and can reduce the overall risk in your portfolio.