Nearly half, 45%, of workers leaving a job are cashing out their 401(k)s, The Wall Street Journal reports, citing a Hewitt Associates study. The rest roll it over to another qualified retirement account or leave it in the former employer’s plan.
The tendency to cash in is even greater among younger people; 66% of those under 30 have cashed out.
Certainly, one reason why the cash out figures are so high is because many employers reject departing employees who have less than $5,000 in their account from the plan. But there is legislation in the works that could change that by requiring employers to give former participants the option to remain in the plan.