More people, 69%, are rolling over their 401(k) savings to a new employer’s plan or an IRA when switching jobs, according to Charles Schwab’s analysis of plans between the fourth quarter of 2008 and the end of 2009.
An overwhelming majority, 80%, of those assets moved into IRAs, which offer greater investment choices, including annuities, Schwab said. Only 10% were taken in cash distributions, and a scant 8% moved into new employer plans.
A prior analysis conducted by Schwab, covering the beginning of 2008 to the beginning of 2009, found that 57% of 401(k) assets were being rolled over, with 75% of the money going to 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 Schwab.