According to Schwab data, 69% of assets held by some 12,200 401(k) participants who left their job in the fourth quarter of 2008 had been distributed from former employers’ plans one year later by the end of 2009. Moreover, an overwhelming majority of those assets was rolled over into IRAs.
Of the distributed assets in the Schwab data:
- 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.
A prior analysis conducted by Schwab from the beginning of 2008 to the beginning of 2009 found that 57% of 401(k) assets held by workers who left their job had been distributed one year later, with three-quarters (75%) of those distributed assets were rolled over into IRAs.
“We are definitely seeing an uptick in the number of 401(k) plan participants who choose to roll over plan assets instead of cashing out or leaving savings with a previous employer,” said Catherine Golladay, vice president of 401(k) advice and education at Charles Schwab, in a Schwab release. “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.”