Benefits May 21, 2009

Nearly Half of Terminated Workers Kept Assets in 401(k) Plan

May 21, 2009 (PLANSPONSOR.com) - Some 43% of the assets held by workers in 401(k) plans administered by Charles Schwab who left their jobs in the first quarter of 2008 were still in the old employer's plan 12 months later, a new Schwab report indicated.
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A Schwab news release said 57% of assets held by 401(k) participants who left their job in the first quarter of 2008 had been distributed from former employers’ plans by the end of the first quarter 2009. Of that amount:

  • 75% of assets were rolled over into IRAs,
  • 14% of assets were taken in cash distributions,
  • 7% of assets were moved into new employer plans, and
  • 4% of assets were taken in other forms of distributions.

“We urge people to educate themselves on their options when they leave a job, especially if they expect to be out of work without access to a savings plan at a new job,” said Rene Kim, Charles Schwab senior vice president, in the news announcement.

Kim said participants should carefully evaluate whether to stay in the old employer’s plan, roll into a new employer’s plan, roll into an IRA, or take a distribution.

The asset data is based on 9,790 terminated participants in Schwab Retirement Plan Services 401(k) plans from 1/1/2008 to 3/31/2009.

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