A new study by HR consulting firm Hewitt
Associates shows that many workers cash out their 401(k) plans when
they leave their jobs.
The study, which looked at nearly 200,000 workers with 401(k) plans,
found that 45 percent elected to take a cash distribution when
departing, while the remainder either kept their savings in their
current employer’s 401(k) plan (32 percent) or rolled the money over to
another qualified retirement plan (23 percent). The study showed a
direct correlation between age and tenure and employees’ decisions to
cash out. The highest incidence of cash distributions was among
employees ages 20 to 29 (66 percent). Older, more tenured employees
were more likely to preserve their retirement wealth, but even so, more
than 42 percent of workers ages 40 to 49 elected to cash out of their
plans.
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