Benefits March 5, 2009

Larger Distributions Less Likely to be Spent

March 5, 2009 (PLANSPONSOR.com) - The larger departing participants' account balances when they take a lump-sum distribution, the more chance they will roll the money into another tax-qualified account.
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class=”2body”> A recent report from theEmployee Benefit Research Institute (EBRI) said 72.4% of lump-sum distribution recipients of $50,000 or more rolled over their entire balance, versus 17% of those taking distributions less than $500.

class=”2body”> In fact, according to the EBRI data, based on participants’ most recent distribution through 2006 from individual retirement accounts (IRAs), annuities, and other employment-based retirement plans, the bigger the distribution, the more participants tended to roll over the entire balance:

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  • $1 – $499, 17%
  • $500 – $999, 19.5%
  • $1,000 – $2,499, 23.7%
  • $2,500-$4,999, 32.8%
  • $5,000-$9,999, 43.9%
  • $10,000-$19,999, 46.5%
  • $20,000-$49,999, 52.5%
  • $50,000 or more, 72.4%

More information is available here .

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