More people are rolling their 401(k) savings into individual retirement accounts when leaving a job, according to new data from a financial services company.
Of assets held by over 12,000 401(k) participants who left their job in fourth quarter 2008, 69% had been distributed from the former employers’ plans by the end of 2009, reports Charles Schwab Corporation, San Francisco. The data represents $427 million in assets.
An overwhelming majority of those assets was rolled over into IRAs, according to Schwab.
Of the distributed assets in the Schwab data, the researchers found that:
–80% were rolled over into IRAs
–10% were taken in cash distributions
–8% were moved into new employer plans
–2% were taken in other forms of distributions
By comparison, a previous Schwab analysis, from Jan. 1, 2008 to Mar. 31, 2009, found 57% of 401(k) assets held by 9,790 workers who left their job had been distributed 1 year later. Of the distributed assets, 75% were rolled over into IRAs.
“Consumers have been made more aware of the importance of saving for retirement, and when it comes time to change jobs, more people are thinking through their options for how to make the most of the money they have already saved,” said Catherine Golladay, vice president of 401(k) advice and education at Schwab.