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Some findings from a Hewitt Associates survey of 200,000 individuals participating in 401K plans found the following:
- 45% of those leaving their job opted to cash out their 401K plan
- Only 23% rolled their money over into an IRA or other retirement plan while 32% left the money in the 401K plan of their soon to be former employer.
- Nearly three-fourths (72.5%) of employees with less than $10,000 in their 401K plan opted to cash out.
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- Approx. two-thirds of employees between the ages of 20 and 29 opted to cash out their 401K plan.
The study shows that many are opting out of what is supposed to be retirement savings. Besides losing the retirement savings, most are forced to pay a 10% penalty and pay taxes on the 401K money when they opt out early.
- 45% of those leaving their job opted to cash out their 401K plan
- Only 23% rolled their money over into an IRA or other retirement plan while 32% left the money in the 401K plan of their soon to be former employer.
- Nearly three-fourths (72.5%) of employees with less than $10,000 in their 401K plan opted to cash out.
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- Approx. two-thirds of employees between the ages of 20 and 29 opted to cash out their 401K plan.
The study shows that many are opting out of what is supposed to be retirement savings. Besides losing the retirement savings, most are forced to pay a 10% penalty and pay taxes on the 401K money when they opt out early.
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