I bring you good tidings today from Charles Schwab, whose new data show that all the time you’ve spent getting blue in the face about the importance of rolling over 401(k) savings is doing some good!
According to Schwab, more people are rolling 401(k) savings into an IRA when leaving a job. Among 401(k) participants who left their job in the fourth quarter of 2008, 69% of assets had been distributed from former employers’ plans one year later.
Of the distributed assets, 80% were rolled over into IRAs and 8% were transferred to new employer plans. And even amidst a recession — when the allure of cold, hard cash likely was stronger than ever — just 10% of assets were taken in cash distributions.
A similar Schwab analysis from the beginning of 2008 to the beginning of 2009 found that 57% of job changers’ 401(k) assets had been distributed one year later. 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,” says Catherine Golladay, vice president of 401(k) advice and education at Charles Schwab.
“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.”
So, keep up the good work, pros. You’re clearly on a rollover roll!
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