How to rebalance your workplace retirement plan February 18, 2014If your retirement plan at work is a 401(k), 403(b) or TSP, rebalancing the portfolio is up to you. Here are a few simple steps to help you get through it.At the beginning of your participation in your employer-sponsored retirement plan, you designate an allocation for your portfolio. For example, you may choose to have 20% of your contributions put into fund A, 30% into fund B, and 50% into fund C. You are choosing how each contribution is deposited into your account. If you contribute $1,000 per pay period $200 will go into fund A, $300 into fund B and $500 into fund C. After 10 pay periods you would have contributed $2000 to fund A, $3000 to fund B and $5000 to fund C. Over that time, fund A may do well, while fund B may lose money and fund C remain fairly constant. If fund A grew to $2652, fund B shrank to $2550 and fund C to $4998 your current allocation would be 26% in fund A, 25% in fund B and 49% in fund C for a total value of $10,200. This may be an allocation that is better suited to someone with a different risk tolerance than you. If that is the case you should rebalance your investments to match the 20/30/50 levels that you initially invested in. Fund A should make up 20% of the total $10,200 which is $2040. To reach the correct value, sell $612 of fund A. Fund B should make up 30% of the total $10,200 which is $3060. To reach the correct value, buy $510 of fund B. Fund C should make up 50% of the total $10,200 which is $5100. To reach the correct value, buy $102 of fund C.Although each pay period your $1,000 contribution will continue to be invested in your initial 20/30/50 allocation, your allocation will drift outside your comfort zone again. When it does, repeat the process.If you have questions about your specific plan, contact us, your plan administrator or the Human Resources Department at your workplace.