Key Takeaways: At job separation, 41.4% of employees cash out 401(k) savings, most draining their entire accounts. Cashing out increases with the proportion of the 401(k) balance contributed by employers. The "account composition effect" is most likely driven by behavioral rather than economic explanations. The cash-out option was presented to terminating employees in a salient way, unintentionally nudging them to withdraw their 401(k) savings. BALTIMORE, MD, July 17, 2023 – When researchers set out to study 401(k) retirement savings accumulation, they found that thousands of studies of retirement savings accumulation ignored the surprisingly high rate of departing employees who cash out retirement savings at job separation.

https://www.miragenews.com/hidden-time-bomb-job-changes-drain-401-1051082/

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