Administration September 11, 2000

Billions Leave Retirement Plans Each Year

November 9, 2000 (PLANSPONSOR.com) - Every year some $400 billion leave retirement plans due to terminations or withdrawals, according to a study by the Spectrem Group.
Reported by

The study reveals that approximately 6.4 million people with a balance of at least $5,000 have the option to withdraw funds every year.

Of those confronted with the option:

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  • 38% – elect to roll all of the distribution into an IRA (51% of the assets)
  • 23% – leave the money in their former employer’s retirement plan
  • 32% – took the cash and paid taxes on it.

The study, reported by Dow Jones, also found that professional investment advisors were involved in the decisions affecting more than half (60%) of these assets, some $121 billion.

Those rolling balances to an IRA noted that the number 1 criteria for choosing the IRA provider was an existing relationship with the provider outside of the plan.

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