A lot of companies will build cash into the fund's value so they don't have to constantly buy or sell a fund because of people taking loans, withdrawals, distributions, fund to fund transfers, etc. Since you work for a huge company, just think if everyone in the company got a contribution to a certain fund once every other week. That could potentially drive up the price of the fund. Or on the flip side, if a fund was sold by a large number of people on one day, it could drive the price down dramatically. Can you imagine $10-$30MM going into or out of a fund at once and what that would do to the valuation of the fund? That amount of money could be just your company alone. The plan provider, brokerage house, and fund company wouldn't want this type of swing in valuation so they build in a cash reserve they can use to put towards day to day trades. This is a very common practice and is why the value doesn't exactly match Yahoo. You are still getting the appropriate returns as anyone else would that is invested in the funds on an individual basis so you haven't lost any money. I imagine if you look at the summary plan description for your old employer, it will outline the process of calculating the value of funds.
I worked at JPMorgan dealing with retirement plans and valuation of funds daily and I would have to say a lot of companies we worked with included cash in the valuation of funds. It can be a little confusing but is a very common practice and I can see how those who don't deal with retirement plans daily could be confused. There isn't a conspiracy theory in the works...sorry
Jeffof KS1:11PM October 20, 2009
I am aware of the 3 ways cash leaks out of a 401K. I have witnessed a 4th way. My numbers just don't add up and this was prior to the stock market crash. My 401K provider gave us ticker symbols for various 401K funds. If I checked yahoo using the ticker symbol provided, I would get a price for a given fund of ~$50 / share, yet when I check my fund it showes a price per share of ~$20 / share. When I asked my HR department, I was referred to the 401K provider. I asked the 401K provider and they stated they use NAV pricing - yet when I check my wife's 401K they use NAV pricing and the wife's NAV price matches, yahoo's prices. I asked my accountant, he stated NAV and yahoo prices should match. I rolled my 401K out and into another employers 401K, when I rolled into my new 401K I asked about yahoo pricing vs NAV, the new 401K provider stated they should match. I contacted department of labor to file a complaint, the Department of Labor kept asking who the previous employeer was, when I told them, they backed off and stated it not their job to be concerned about 401K prices. Previous employeer is a mult-billion dollar company which carrys a lot of weight within the govt. When I compared yahoo vs my 401K providers $$/ share, I came up $95K short.
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Jeff of KS 1:11PM October 20, 2009
barron of TX 4:15PM October 01, 2009