From the Employee Benefit Research Institute:
An increasing percentage of retirement plan participants are preserving their retirement assets in tax-qualified accounts, but a significant number are using at least some of these assets to pay off debts, start a business, or buy a home, according to a study released today by the nonpartisan Employee Benefit Research Institute (EBRI).
The study, in the January EBRI Notes, points out that with 401(k)-type plans now dominant and “traditional” pensions offering lump-sum distributions at retirement, a growing number of workers are faced with making decisions about what to do with assets they have earned in their employment-based plans when they change jobs. After leaving a job with an employer that sponsors a retirement plan, workers have three choices for their retirement accounts: leaving the money in the plan, rolling it over to another tax-qualified savings plan, or cashing it out.
According to the study, “Lump-Sum Distributions at Job Change” (available at www.ebri.org), the percentage of those rolling over their most recent lump-sum distribution to another tax-qualified retirement plan — thus preserving the assets for retirement — increased to 44.3 percent through 2006, compared with 19.3 percent of those who received their most recent distribution through 1993.