That said, Fidelity data shows that about one-third of participants move their money from a former employer’s plan within four months after a job transition.
Of participants who had a job transition – and subsequently left those balances in the plan, nearly three-quarters (71%) of respondents said they are consciously keeping their assets in an old plan for the time being, with the top reason (59%) cited being satisfaction with the plan features or services and access to specific investments. On the other hand, more than a quarter (27%) indicated that a lack of time or mind share has prevented them from taking any action.
“The findings of this study highlight reasons why some investors stay in their old plans, and it also stresses the fundamental need for more education on the basic options investors have with these assets,” said Sarah Walsh, vice president, Fidelity Investments. “Given its leadership in the IRA and workplace savings plan category, Fidelity is uniquely positioned to provide perspective on the pros and cons of all the options to help participants make the choice that’s best for them.”
Asked if they planned to take any action within the next year, nearly a quarter (24%) indicated they were not sure, and nearly as many (18%) stated they were going to move the money to an Individual Retirement Account (IRA) or their current employer’s workplace savings plan. However, most (57%) stated they were planning to keep their investments in their old plan for the next 12 months.
Asked why they might be inclined to move those balances, respondents indicated:
- 37% - lower fees
- 35% - consolidation and control of assets
- 26% - more investment options
The study was compiled from an online survey of 1,093 Fidelity participants who currently have an employer-sponsored retirement plan with a former employer, have stayed in their workplace plan since leaving their employer for at least 120 days, have at least $50,000 in plan assets and are the financial decision makers for their retirement plans. The survey was hosted and administered by TNS between October 21 and November 22, 2010.
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