The doom and gloom is everywhere. Unfortunately, a little knowledge is a dangerous thing.

Employees see their 401(k) statements and read about the hit 401(k)s and similar retirement accounts have taken in the current economic downturn. One especially dire estimate said that on a national level, 401(k) accounts have lost a total $2 trillion in the last 15 months.

What’s an employer to do? According to financial planner Sarah McDevitt, it’s best to look at what not to do:

• Pretend everything is hunky-dory and not address the issue with employees
• Fail to emphasize the point that down markets eventually go up again and a 401(k) is a long-term investment, not a short-term get-rich strategy, and
• Allow potential misinformation about the workings of your company’s 401(k) plan to create undue worry among employees.

Generally speaking, the best thing to do with a 401(k) in a down market is sit tight. Taking loans against the plan is usually a poor strategy for a short-term fix, and taking a full-fledged distribution is even worse.