Sen. Perdue Works to Improve 401(k) Portability
On average, approximately 14 million Americans change jobs each year, and about 40% of those individuals opt to "cash out" their 401(k)s instead of transferring those funds to another retirement account. These cash outs incur penalties and taxes, which ultimately lead to a
"Retirement plan cash out leakage at the time of a job change is harmful to workers' retirement," wrote the senators. "With an estimated 14 million workers with 401(k) plans changing jobs each year, reducing leakage and consolidating low-dollar accounts through greater use of auto portability will set millions of working Americans on a better path to a secure retirement."
The auto portability option suggested by the senators could result in more than two million employees opting to keep their savings in retirement accounts instead of "cashing out" and incurring losses that carry long term consequences.
View the full text of the letter here (https://www.perdue.senate.gov/imo/media/doc/DOL%20Letter%20on%20401(k)%20Auto%20Portability.pdf).
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