Despite the growing need for employees to save for retirement, a significant number of workers participating in 401(k) plans "cash out" of them once they leave their company, according to new research by Hewitt Associates. Hewitt's study of nearly 200,000 workers who participate in their 401(k) plans found that 45% elected to take a cash distribution once they left their jobs. The remainder either kept their savings in their current employer's 401(k) plan (32%) or rolled the money over to a qualified IRA or other retirement plan (23%). While employees who were older and more tenured were more likely to preserve their retirement wealth, more than 42% of workers age 40-49 also elected to cash out of their 401(k) plans upon leaving their jobs.
Source: Press Release Hewitt Associates (July 25, 2005)