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Washington,
D.C.
– Over
the
past
four
decades,
Americans
have
cumulatively
lost
about
$2
trillion
in
retirement
savings
due
to not
transferring their
401(k)
retirement
accounts
when
transitioning
from
one
job
to
another.
To
help
address
this
problem,
U.S.
Senator
Tim
Scott
(R-SC) led
a
letter
to
Department
of
Labor
Secretary
Alexander
Acosta,
requesting the
Department
clear
the
path
for
implementation
of
401(k)
auto
portability
that
would
make
it
easier
for
Americans
to
save
for
their
future.
On
average,
approximately
14
million
Americans
change
jobs
each
year,
and
about
40%
of
those
individuals
opt
to
“cash
out”
their
401(k)s
instead
of
transferring
those
funds
to
another
retirement
account. These
“cash
outs” incur
penalties
and
taxes,
which
ultimately lead to a $70
billion annual loss
in
savings. The
highest
“cash
out”
rate
occurs
with
workers
with
the
smallest
account
balances,
$5,000
or
less.
The
letter
specifically
states,
“Retirement
plan
cash
out
leakage
at
the
time
of
a
job
change
is
harmful
to
workers’
retirement…
With
an
estimated
14
million
workers
with
401(k)
plans
changing
jobs
each
year,
reducing
leakage
and
consolidating
low-dollar
accounts
through
greater
use
of
auto
portability
will
set
millions
of
working
Americans
on
a
better
path
to
a
secure
retirement.”
The auto
portability option
suggested
by
Scott
could
result
in
more
than
two
million
employees
opting
to
keep
their
savings
in
retirement
accounts
instead
of
“cashing
out”
and
incurring
losses
that
carry
long
term
consequences.
Various
groups
have
already
come
out
in
support
of
this
commonsense
initiative,
including
the
U.S.
Chamber
of
Commerce,
Financial
Services
Roundtable, American
Benefits
Council,
American
Retirement
Association,
Investment
Company
Institute,
and
the
Securities
Industry
and
Financial
Markets
Association.
Additional
signatories
of
the
letter
include
Senators
Steve
Daines
(R-MT),
Mike
Crapo
(R-ID),
Pat
Roberts
(R-KS),
Mike
Rounds
(R-SD),
Thom
Tillis
(R-NC),
Tom
Cotton
(R-AK),
Susan
Collins
(R-ME),
Todd
Young
(R-IN), Bill Cassidy
(R-LA),
and David
Perdue(R-GA).
You
can
view
the
full
text
of
the
letter here.
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