According to new research from Cerulli Associates, approximately $720 billion of defined contribution assets that were eligible for distribution remained in employer-sponsored plans in 2013. Those assets were more than twice as large as the amount that rolled out.
Of the assets that did not stay in a former employer's plan, nearly one-quarter (24%) were rolled out to either an IRA or a new employer plan. The rest (5%) were taken as a cash distribution to initiate an indirect rollover, to satisfy a required minimum distribution (RMD) or for cash.
In “Evolution of the Retirement Investor 2014: Understanding 401(k) Participant Behavior and Trends in IRAs, Rollovers, and Retirement Income" (available for purchase here for $15,000), Cerulli examines retirement decisions made by individual investors throughout their retirement planning lifecycle, with particular emphasis on 401(k) plan participants, IRAs and rollovers and retirement income. The report profiles these individuals and allows firms to develop strategies aimed at capturing assets earmarked for retirement.
The report suggests that many 401(k) participants are hesitant to take action with their prior accounts, providing an opportunity for financial advisors and record keepers to inquire about prior employment history in order to determine whether there are abandoned accounts.
