Bakersfield has been in the news over the last few months due to the merger of Aera Energy and California Resources Corp. This change likely has some employees wondering what comes next concerning their investment accounts. Here’s a guide to help you navigate the process and ensure your financial goals remain on track.
Understand the Merger’s Impact on Benefits
- Review Company Communications: The merging companies typically provide details about how benefits will change. Pay close attention to updates about 401(k), pension plans, and stock options.
- Seek Clarity on Investment Accounts: Determine whether your current plan will merge into the new company’s plan, stay as is, or require other action. Contact your HR department or plan administrator for specifics.
Evaluate the New Investment Options
- Compare Investment Menus: If your 401(k) or other investment accounts are moving to a new plan, compare the available funds and fees. Look for similar or better investment options.
- Understand Employer Contributions: Check whether the new company offers matching contributions or profit-sharing and how these compare to your previous plan.
Review Your Asset Allocation
- Ensure Consistency with Goals: Changes in available funds may require adjustments to maintain your desired risk level and diversification.
- Seek Professional Advice: If you’re unsure how to reallocate, consult a financial advisor who can help you align your investments with your goals.
Decide What to Do with Old Accounts
- Roll Over or Consolidate: If the merger leaves you with accounts at different providers, consider rolling them into one account to simplify management. This could be your new employer’s plan or an IRA.
- Stay or Move: Evaluate whether it’s beneficial to leave funds in your old employer’s plan, especially if it has unique benefits like access to institutional funds.
Monitor Stock Options or Equity
- Assess Valuation Changes: If you hold stock options or equity in the merged company, understand how the merger affects their value and vesting schedule.
- Diversify if Needed: Too much exposure to your employer’s stock can increase risk. Consider diversifying* to protect your portfolio.
Understand Tax Implications
- Avoid Taxable Events: Ensure that any rollovers or transfers are done correctly to avoid triggering taxes or penalties.
- Plan for Future Withdrawals: Changes in plans could impact required minimum distributions (RMDs) or tax strategies in retirement.
Communicate with Your Financial Advisor
- Update Your Plan: Share merger details with your financial advisor to integrate any changes into your broader financial strategy.
- Ask About Red Flags: An advisor can help identify potential issues, such as higher fees or limited investment options, that may warrant further action.
Stay Proactive
- Attend Workshops or Webinars: Employers often host sessions to explain benefit changes. Make time to attend and ask questions.
- Track Deadlines: Mergers often come with tight timelines for making decisions about your investment accounts. Don’t miss critical deadlines.
When it comes to change, there can be a lot of fear in the unknown. After many years serving the Bakersfield area, I have assisted numerous employees in navigating a new retirement planning system and helped ensure that their questions are answered. The good news is that many positive things can come from a corporate merger – you just need to be well informed when it comes to your benefits and options.
CLICK HERE to make an appointment and we’ll help you stay on track and organized.
*Diversification may help reduce, but cannot eliminate, risk of investment losses.