The bill would encourage retirement plan participation by giving people penalty-free access to funds in the event of an emergency.
Educating participants about the importance of remaining committed to retirement savings and of the value of consolidating accounts is a good place to start, experts say.
The Savings Preservation Working Group says that at least 33% and as many as 47% of plan participants withdraw part or all of their retirement savings when switching jobs.
The Bipartisan Budget Act of 2018 made it easier for retirement plan participants to access hardship withdrawals without taking loans first; since passage of the law, hardships withdrawals are up 40% in Fidelity’s book of business.
Withdrawals from IRAs accounted for most of the leakage, according to the GAO.
Plan sponsors are being more conscious and cautious with respect to managing the implications of the DOL fiduciary rule—and this is impacting plan leakage and rollover decisions to a strong degree, Callan says.