The Access Gap Between Rollovers and Installments

Most participants in savings and thrift plans (like 401(k)s) have the option to roll balances from previous DC plans into their new plans, but far fewer have the option to take those distributions in installments or annuities, according to a new analysis.

According to the Bureau of Labor Statistics National Compensation Survey (NCS) program, 78% of private industry workers participating in savings and thrift plans had the option to roll over the assets from previous defined contribution plans into a current employer’s savings and thrift plan. While 4% did not have that option, it could not be determined for 18% of workers participating in savings and thrift plans in 2012 whether the rollover option existed.

When it comes to getting money out of those prior plans, the options weren’t quite so clear cut. Lump sum options were nearly ubiquitous: Among savings and thrift plan participants in private industry in 2012, 91% had this option available, compared with 90% in 2009.

However, in 2012, only 39% could receive their retirement savings in the form of installments, though that was up from 27% in 2009. Similarly, in 2012, just 17% had an annuity option available (as did 15% in 2009), while 10% of private industry workers in savings and thrift plans had an option from the “other” category available (such as a combination of installments and annuity), compared with 12% in 2009.

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