Data from Brightscope is showing that withdrawals from 401(k) plans are accelerating as Baby Boomers start to retire, Yahoo Finance reports. The data shows a significant outflow of assets from 401(k)s to IRAs in 2013.
And citing projections by Cerullli, a Wall Street Journal report on the Brightscope data says that the surge in withdrawals is expected to increase, and reports that providers and money managers are scrambling to try to figure out how to capture a piece of that pie.
All of this raises a question about the effect that the DOL’s proposed fiduciary regs will have on IRA rollovers. Will the proposed rule cause more people to keep money in their DC plans, since access to advice on IRAs could be constricted?
DC plans have become the central savings and retirement vehicle for most Americans, a trend that will only continue. For current employees, consolidating different accounts in various DC plans and IRAs into their current employer’s plan is starting to gain traction. And the idea that plans might even help retired employees manage their retirement income no longer seems so foreign.
Meanwhile, plan sponsors are waking up to the importance of their retirement plan to the viability of their company and the fact that having more assets and higher account balances can result in lower fees and better outcomes.
As we continue to transition to an era where employer-deducted, participant-directed retirement plans are ubiquitous, the idea that an employee’s current plan could serve as a savings and retirement hub makes sense. But plan sponsors need help from record keepers to manage the roll-in process, as well as advisors helping guide the process. And if retirement income is ever to become a real option, record keepers will also need to shoulder the responsibility of communicating with retirees.
Seems like an opportunity.
