Americans Miss Out On 401(k) Gains As They Change Jobs

Benzinga

Former employers are increasingly moving small 401(k) balances into safe harbor IRAs, where the money often sits in cash earning little interest and incurring fees. Americans frequently miss the notices, leaving billions in low-return accounts as balances rise under new rules.

Transcript

00:00It's Benzinga, bringing Wall Street to Main Street.

00:02Americans are losing investment gains when former employers move small 401k balances

00:07into safe harbor IRAs that sit in cash, according to the Wall Street Journal.

00:12Employers can transfer accounts between $1,000 and $7,000 after notifying former workers,

00:18but many people overlook the notices and later discover their savings,

00:22earned little interest, and incurred fees.

00:24These involuntary rollovers are rising under recent law changes,

00:28and researchers say most savers leave the money untouched for years.

00:32Safe Harbor IRAs hold about $28 billion and could reach $43 billion by 2030.

00:38Some companies now offer services to transfer small accounts into new employer plans

00:42to help workers keep track of their savings.

00:45For all things money, visit Benzinga.com.

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