The majority of 401(k) participants choose lump-sum cash payouts when changing jobs instead of rolling over money into their new employer's plans or IRAs, according to a study by Hewitt Associates, a management consulting firm in Lincolnshire, Ill.

The findings contradict an earlier study by American Century Investments of Kansas City, Mo., that found that most job-changers would rather roll their 401(k) assets into another retirement plan than cash out of their plans.

Despite the drawbacks of taking the cash, including in some cases losing close to half the money in taxes and penalties, the Hewitt survey of 170,000 defined-contribution-plan distributions for participants age 20 through 59 found that 68 percent opt for cash payment when changing jobs. Less than 26 percent roll their balances into IRAs and only six percent move their assets into their new employers' plans. The study found this was the case, regardless of age.

American Century's survey of 750 respondents with retirement savings or investments contrasts sharply with the Hewitt study. American Century found that only four percent of employees would cash out of their 401(k) plans while 77 percent would keep the money in some type of tax-advantaged retirement plan.

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