Survey: Investors Willing to Prematurely Tap Retirement Funds

The American Century Investments poll found that 37% would think about a premature withdrawal – up from 32% saying that last year. Virtually all respondents (96%) said they were aware of the potential impact on their pocketbooks (federal income taxes and a possible 10% penalty).

Unfortunately, consolidating retirement assets is something few workers have considered. Of the 53% of survey respondents with an IRA or 401(k), a majority (71%) have accounts at more than one financial institution while a quarter (28%) still have money with a previous employer’s qualified plan. Only about one third (32%) of workers with multiple accounts have even pondered an account consolidation, the survey found.

When asked why they had not pooled their accounts:

• 60% said they “prefer to have their money spread around”
• 15% said they didn’t have enough time
• 15% said they hadn’t yet thought about it
• 14% said a rollover was “too complicated.”

Surprisingly perhaps, the workers surveyed understand some of the advantages of consolidation. The majority (59%) cite convenience as a benefit, while less than half (44%) state that the ability to view one’s complete portfolio was an advantage to consolidation.

Other significant benefits to consolidation were less apparent to investors. Only 39% state that consolidation results in easier tax accounting, while less than a third (32%) understand that they may be able to pay lower fees by consolidating their accounts.

The results of American Century’s Rollover Survey were drawn from telephone interviews with 1,025 adults from January 30, 2003, through February 2, 2003.